Fixed-rate lending protocol Element Finance nabs $4.4 million


Fixed-rate lending protocol startup Element Finance has raised $4.4 million in new funding.

Andreessen Horowitz and Placeholder led the seed round, accompanied by SV Angel, A.Capital, Scalar Capital and Robot Ventures, according to a funding announcement.

The protocol touts fixed-rate yields for decentralized finance (DeFi) users, a process that enables users to purchase bitcoin, ether and USDC at a discount without locking buyers into a fixed term. This then allows them to swap between assets at any time. 

Interest rates in most DeFi markets move by demand, meaning a user can borrow an asset at a rate that could radically change over the time they're holding it. Fixed-rate protocols like Element mitigate this by trading underlying assets at a discount until they mature. 

Yield was the first to do this with fyDai, or fixed yield Dai. Element achieves this in a similar way by splitting the base asset into two tokens: the principal token and the yield token. Users can sell their principal as a fixed-rate income position, allowing them to swap base assets at any time while the yield token matures.

Founders of other DeFi venues have already taken notice. Compound founder Robert Leshner, Gauntlet founder Tarun Chitra, Aave founder Stani Kulechov and Ethereum co-founder Joseph Lubin have all backed the protocol, among others. 

Element's team said the protocol's official release date is "imminent," but did not disclose when exactly the launch will occur.

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May 5, 2022, 3:17PM UTC