JellyFi, a capital-efficient DeFi lending protocol that will soon enable uncollateralized crypto loans, has closed a seed funding round of $4.4 million from leading crypto venture capital firms. The round was led by Lemniscap, and joined by ParaFi Capital, Tioga Capital, White Star Capital, DeFiance Capital, True Ventures, Digital Currency Group, Genesis, Divergence Ventures, AngelDAO and several angel investors. The funds will be used to support JellyFi’s growth through R&D, key hires, and performing multiple audits.
Founded in 2021, JellyFi addresses capital inefficiencies in the DeFi lending market. Today, institutional borrowers including dApps and protocols have limited options to meet their short term and recurrent liquidity needs through crypto loans. The main DeFi lending protocols require the borrower to overcollateralize their loans, which is a blocker for the majority of borrowing use cases in DeFi compared to TradFi.
Borrowers will have to pass a thorough vetting process before being whitelisted and able to use the JellyFi platform, thus reducing the risk of default for lenders. Once borrowers are whitelisted, JellyFi will only use one liquidity pool per borrower in order to strengthen security. Borrowers will have access to instant loans at a fair rate via JellyFi’s bid order book. Borrowers will have flexibility on JellyFi, as they will not have to lock any collateral in order to meet their needs for recurrent and short term liquidity. Interest and principal on the crypto loans will be repaid at maturity.
With JellyFi, liquidity providers (LPs) will benefit from higher returns than overcollateralized lending platforms, while having granular control over their investment portfolios. Lenders will be able to perform their own risk assessment, choose who they lend to, and specify their lending rate. Therefore, lenders will not have to lend to borrowers they don’t trust, or expose themselves to unnecessary defaults because they were outvoted during loan approval. There will also be a vetting process that will add an additional level of trust for lenders.
“Decentralized lending protocols have enabled the slew of innovation that we now call DeFi. They are a critical part of every emerging Layer-1 ecosystem striving to build financial use cases,” said Roderik van der Graaf, Managing Partner at Lemniscap. “Overcollateralization, however, is a major bottleneck preventing wider adoption, more inclusive access, as well as further use case development and financial innovation.”
“JellyFi is a pure example of a new iteration of protocols in DeFi, going by the name of DeFi 2.0. It builds on major shortcomings of existing solutions by breaking down the barriers of entry and offering corporate credit dynamics to cater to the up-and-coming decentralized organizations and their on-chain treasuries. Top team, pressing pain point, and first-class product design are just some of the reasons why we decided to lead the round for JellyFi,” continued van der Graaf.
“Uncollateralized lending is a massive market opportunity for DeFi. JellyFi’s uncollateralized protocol aims to bring capital efficient credit markets to DAOs and institutions across DeFi and CeFi. Through a decentralized whitelisting process, any protocol can tap into JellyFi’s liquidity pools with flexible borrowing terms. We’re excited to support JellyFi’s journey in becoming a liquidity backbone for DeFi,” said Anjan Vinod, Managing Partner at ParaFi Capital.
“The DeFi lending market has been able to scale at breakneck speed as trust of repayment is only dependent on the overcollateralized nature of the loans. At Tioga we believe that as trust between and within DAOs increases, so will the appetite for uncollateralized loans. With new on-chain primitives being built every day, I wouldn’t be surprised to see $100bn in TVL for unsecured loans in 5 years from now, up from ~$1bn today. Having won the credit delegation track of the ETHGlobal MarketMake hackathon earlier this year, we believe that JellyFi has the right project to become a category defining protocol in unsecured lending,” said Michiel Lescrauwaet, Managing Partner at Tioga Capital.
“JellyFi is a capital-efficient DeFi lending protocol that will enable uncollateralized crypto loans, where institutional borrowers can obtain competitive loan terms, and lenders get access to higher returns while having more granular control over their investment portfolios. JellyFi aims at being much more DeFi native and integrated within the ecosystem, and to provide liquidity for a range of new borrowing use cases,” said Alexis Masseron, Co-Founder and CEO of JellyFi.
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JellyFi is a capital-efficient DeFi lending protocol that will enable uncollateralized crypto loans. Institutional borrowers will obtain flexible and competitive loan terms. Uncollateralized loans will function as a revolving line of credit, giving borrowers flexibility for recurrent and short term liquidity needs. Lenders will be able to access higher returns with granular control over their investment portfolios. There will be no idle capital on JellyFi. Lenders will earn high interest on actively loaned out capital, and unused capital will be placed on a trusted third-party liquidity protocol, while simultaneously earning additional returns from JellyFi. JellyFi will enable trusted borrowing and lending, opening a range of use cases for borrowers.