Yield raises $10M to expand fixed-rate DeFi lending on Ethereum


In short

  • Yield’s new funding round was led by crypto investment firm Paradigm
  • The investment is part of a wave of interest in DeFi fixed income securities

The world of decentralized finance or DeFi – a Lego-like stack of services that allows people to trade and lend without intermediaries – is growing rapidly and increasingly includes elements of the traditional sphere of finance.

A recent example is Yield, a startup that launched in early 2020 and announced a $10 million funding round on Wednesday led by blue chip crypto investment firm Paradigm.

Yield is among a growing number of startups to offer fixed rate lending, a relatively new innovation in DeFi that initially only allowed users to borrow and lend at variable rates. This is an important development as fixed rate offerings provide reliable income and are the cornerstone of traditional finance.

The specific product offered by Yield is akin to zero-coupon bonds in the world of conventional finance, but instead consists of tokens of a fixed value that borrowers can sell at a discount to obtain capital.

Yield has developed its own protocol, Yield Protocol, which runs on top of the Ethereum blockchain. As part of its Wednesday announcement, Yield also revealed that its platform will soon offer fixed-rate loans integrated with MakerDAO, the Ethereum-based project minting stablecoin DAI.

It’s all part of what Yield Founder and CEO Allan Niemerg described in a blog post as “Version 2 of the Yield Protocol.” Niemberg added that the new version will serve to increase the number of assets the yield can guarantee and is “gas-efficient,” a term that refers to blockchain’s low transaction costs.

“The work that Yield has done in DeFi with its fixed rate lending protocol is fundamental to the space. We look forward to continuing to work closely with them as they build new primitives and financial tools on Ethereum,” Paradigm executive Dan Robinson said in a statement explaining the company’s investment.

Yield isn’t the only crypto startup seeing an opportunity in fixed lending. In March, a startup called Element announced that it had raised $4 million from venture capital firm Andreessen Horowitz and others to facilitate access to high-yielding fixed DeFi loans. Meanwhile, research firm Messari cited Yield, along with fixed-income ventures called Notional Finance and yUSD, as “the next wave of DeFi innovation.”

In addition to Paradigm, Framework Ventures contributed to the Yield funding round, alongside Symbolic Capital Partners, CMS Holdings, Variant and DeFi Alliance.


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