Cashiera decentralized finance protocol designed to enable the lending and borrowing of blockchain assets, today announced that it has raised $6.8 million in new funds to expand its integrations with third parties to launch lending marketplaces.
Led by Blockchain Capital, the round was joined by Franklin Templeton, Toyota Ventures, Bessemer Venture Partners, Upstart, Signum Capital and others.
Decentralized finance is an emerging technology based on blockchain and cryptocurrencies that eliminates the need for intermediaries, such as traditional banks, in financial transactions and is primarily driven by programmable smart contracts. DeFi protocols now represent over $200 billion in total value locked, primarily from collateralized lending and trading applications.
Using Teller’s protocol, users could borrow and lend cryptocurrency tokens without the need for collateral in a manner similar to credit cards and personal loans. This would open up a whole new market within the DeFi industry, said Ryan Berkun, Founder and CEO of Teller.
“Teller is paving the way for a traditional financial primitive to enter the DeFi space: unsecured, data-driven crypto asset lending and borrowing,” Berkun said. “The ability to add off-chain data to a loan application will transform how individuals and lenders interact with DeFi and unlock lending opportunities only currently available in traditional financial markets.”
The Teller Protocol approves unsecured loans by allowing users to connect their bank accounts and assess the borrower’s banking history. This serves as a measure of the borrower’s creditworthiness for potential lenders. Some borrowers may receive interest rates as low as 0%, depending on the riskiness of the loan.
Teller is also able to provide secured loans, which will require a minimum amount of collateral. Borrowers can also connect their bank accounts to lower their interest rates based on their creditworthiness and banking history.
“Unsecured lending is a thorny issue in the pseudonymous on-chain world and one of the biggest opportunities for DeFi,” said Bart Stephens, co-founder and managing partner of Blockchain Capital. “The Teller Protocol allows traditional and crypto native lenders to use the best possible credit scoring techniques while maintaining confidentiality.”
DeFi lending has been a developing part of the market with many different protocols emerging to support lenders and borrowers. Examples include Aave, Financing of the cream and Compoundall of which are DeFi protocols, decentralized software applications that provide lending services.
This all comes at a time when centralized services such as cryptocurrency exchange Coinbase Inc. and BlockFi Lending LLC have come to the attention of the United States Securities and Exchange Commission due to their activities. BlockFi recently settled $100 million penalties with the SEC and agreed to register its crypto lending product.
