DeFi lending protocol startup Liquity raises $6 million in Series A round


On March 29, decentralized lending startup Liquity announced the completion of a $6 million Series A investment round.

In a blog post on the funding round, founder Robert Lauko wrote that "[t]his investment round will allow us to continue pursuing Liquity’s mission of improving access to on-chain borrowing, removing interest rates, and minimizing governance in DeFi." 

As to the specific plans for the latest funding, Lauko told The Block that "we're committed to keep improving our UI launch kit (that we are providing to third parties) by making it more user-friendly and accessible to a broader public." 

Investment firm Pantera Capital led the round, with participation from Nima Capital, Alameda Research and others.

Similar to MakerDAO, Liquity's LUSD stablecoin depends upon crypto deposited as collateral in order to distribute a token pegged to the US dollar. The protocol first gained prominence last spring, around the same time that a sudden plunge in ETH's price resulted in mass liquidations on MakerDAO's platform.

The problem? According to the people behind Liquity, over-collateralization. The platform boasts a collateralization ratio of 110%, as compared to Maker's 150%. Liquity's founders also claim its use of a separate LQTY token to stabilize the riskiest loans on the protocol gives it an edge.

LUSD is scheduled to launch on April 5, according to the team. The current funding round focused on the sale of LQTY, the total supply of which is capped at 100 million,  Lauko said. Including the current funding round, Liquity has allocated 33,902,679 LQTY to investors.

Monday's announcement follows a $2.4 million seed round in September. 

Disclosure: Pantera Capital is an investor in The Block.

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May 5, 2022, 3:17PM UTC