Based in Baar, the startup Liquity was founded this year and has just raised seed funding of US$2.4 million, as was reported in an press release on startupticker.ch. The financing round was led by Polychain Capital. Liquity intends to use the funds to further develop its platform on Ethereum. The company offers a decentralized protocol on Ethereum that provides interest-free liquidity against Ether, the digital currency of the Ethereum network.
These interest-free loans called “troves” are issued to borrowers in its US$-pegged stablecoin. Due to the volatility of Ethereum, users have to deposit more value in crypto than they borrow in stablecoins. In the case of Liquity, the minimum collateralization ratio is 110 percent, which is “much lower than usual”, as the press release reveals.
Alongside Polychain Capital, investors included a-capital, Lemniscap, 1kx, the Dfinity Ecosystem Fund, Robot Ventures (Robert Leshner) and Alex Pack. The new investors join Tomahawk VC, who led Liquity’s pre-seed round earlier this year. Liquity recently entered into a valuable partnership with Gauntlet. The developer of a blockchain simulation and testing platform will simulate and stress test the Liquity system with its complex incentive mechanisms.
“Liquity is thrilled to have investors on board who support our mission of improving access to on-chain borrowing, reducing interest rates and minimizing governance,” said Robert Lauko, Founder and CEO at Liquity. Several investors have committed to help bootstrap the network and plan to be active users of Liquity’s products.