Cryptocurrency credit startup Credix has raised $11.25 million in a Series A funding round, the Belgian company announced Tuesday (Sept. 6).
“Within the next decade, debt capital markets will be on-chain and democratized,” Founder and CEO Thomas Bohner said in a blog post. “Credix is building the infrastructure to enable this at scale — we’re developing a next-generation credit platform matching institutional investors and FinTech lenders.”
Bohner said his company aims to bridge decentralized finance (DeFi) and real-world assets (RWA). He said it’s become apparent that RWA can bring “sustainable and scalable growth” to the DeFi ecosystem.
The total DeFi market cap has fallen by 63% while Credix grew 20-fold and originated more than $23 million in active loans in six months, Bohner said in the post. The company is live in Brazil and will expand soon into other emerging markets.
“Our platform now enables FinTech companies and other non-bank lenders to convert their receivables and real assets into investment capital,” Bohner said. “All financing happens on-chain using USDC and smart contracts, creating instant efficiencies, settlement and more transparency.”
PYMNTS examined the concept of decentralized crypto lending earlier this year, noting that it is more complex than its centralized counterpart, although the core mechanism is the same.
Read more: How Does Decentralized Crypto Lending Work?
Lenders lock their crypto into a lending platform in exchange for interest — in some cases very high interest, or yield, rates. Borrowers acquire those funds by offering collateral worth 125% to 150% of the loan, which they get back after repaying the loan with interest.
If the value of the collateral cryptocurrency decreases close to the value of the loan, borrowers get a margin call. If they fail to respond in time — and the deadline can be soon if the token in question is dropping quickly — the collateral is liquidated for the amount borrowed, interest owed and typically a liquidation fee.
As borrowers usually take out these loans to provide liquidity without selling the underlying cryptocurrency, which they believe will continue to rise in value over the long term, this means they’ve paid several fees and had their collateral sold at a substantial loss.
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