Financial institutions continue to seek ways to enter the crypto market, and decentralized finance (DeFi) products are one of the mechanisms that help them gain market share. Investors in DeFi products can get yields from capital By lending cryptocurrency in exchange for interest..
However, due to asset class volatility, DeFi lending is much more risky than traditional lending. Just as “high-yielding” bonds compensate investors with more cash to bet on higher-risk companies, DeFi lending is a traditional practice where customers basically lend money to banks. It can offer much higher interest rates than a savings account.
Conduit is building a set of APIs that developers can use to build a platform that provides access to DeFi products. Kirill Gertman, CEO and co-founder of Conduit, as vice president of products for cryptocurrency BRD, which Coinbase acquired last November, provides the back-end tools his team needs to build products for users. I directly experienced the challenge of finding a vendor. After working for Arrival Bank and spending half a year as product manager for consumer FinTech Eco, Gertman created Conduit as a back-end solution he was looking for but couldn’t find.
“Looking at the FinTech side, there’s already a huge stack built correctly to support it. If you have Stripe and you want to issue a card, you have Marqeta. If you have a use case you can think of, API Someone has it and it’s ready to use, “Gertman told TechCrunch in an interview.
Conduit aims to be a one-stop shop for neobanks and financial institutions to plug their products into the DeFi ecosystem. Gertman says this is easier because the Conduit itself is regulated and compliant, which reduces the compliance burden on companies that use the tool.
In order for consumers to earn DeFi yields, fiat currency is first converted to stablecoin. Since it is a type of cryptocurrency fixed to the value of fiat currency, you can invest in various cryptographic protocols such as Compound and AAVE. Conduit offers two solutions that help businesses access these yields.
The first is a growth revenue account provided by online banks to their clients, who can invest fiat currencies in DeFi. The second is Conduit’s corporate finance solution, which provides companies with high-yielding DeFi accounts.
“We do a lot of ledge ringing and basically creating very simple bundles. [our clients]So they don’t have to worry about complexity, “Gertman said, including how to convert dollars to stablecoin and how to calculate rates.
Gertman did not name a particular Conduit customer, but said that it falls into two categories, neobanks and smaller crypto exchanges, especially in regions like Latin America. The biggest customers are Canada and Brazil, where the products were first launched, and then they are looking to expand into markets such as the United States and Europe, Gartman said.
Gartman said he recognizes two benefits of expanding DeFi products. The first is access. The DeFi protocol is not allowed, so users can lend and borrow funds without providing a credit score, identity verification, or collateral. Second, DeFi connects users globally, allowing investors in countries with extremely low or negative interest rates to earn higher yields and withdrawing from the global liquidity pool to give companies a favorable rate. Is to make it easier to borrow money.
Conduit says it plans to triple the number of fully remote personnel across North America and Latin America by the end of next year by hiring localized knowledgeable engineering, sales and compliance professionals. increase. Regulation has played a role in the countries that Conduit is targeting, he added, adding that the lack of regulatory clarity from the Securities and Exchange Commission (SEC) has delayed Conduit’s entry into the United States.
To promote its global expansion With the support of Diamond Ventures, FinVC, Gemini Frontier Fund, Gradient Ventures and Jump Capital announced today, Conduit has raised a $ 17 million seed round led by Portage Ventures. Many FinTech executives from companies such as PayPal, Coinbase and Google Pay also participated in this round.
Gartman decided that the company needed to procure a “larger than average seed round” because conduits incur high legal costs to ensure compliance in all markets.
“Obviously, market conditions helped us, and we took advantage of it, and I’m not going to hide it … even if there was a cryptocurrency winter or something like that. We can survive it, “Gartman said.