From Acala to Litentry, Top Institutional Investors Are Betting on Polkadot DeFi
On the eve of the outbreak of the DeFi bull market, a large number of related projects have been favored by capital.
From the 3.12 black swan incident to the end of April, top crypto capital Polychain, DRF, SNZ, KR1, Hypersphere Ventures, Web3.Capital, Coinbase Venture, Paradigm Capital, Fenbushi Capital, Collaborative Funds and other institutions, including P2PCCapital, have invested in DeFi The project was invested with an olive branch, and in less than two months, the financing scale exceeded 13 million US dollars.
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DeFi on Polkadot
Acala is a financial primitive platform that will provide an alternative infrastructure for DeFi on Polkadot's multi-chain ecosystem. The Acala platform will employ a governance structure similar to MakerDAO, with split governance (ACA) and stablecoin (aUSD) tokens on the Polkadot network.
However, it plans to go beyond MakerDAO's existing capabilities and feature a decentralized exchange (DEX). Acala also recently announced that its parachain will be compatible with Ethereum smart contracts.
This means that everything that happens on Acala can be transferred to Ethereum and back to Acala. For example, deposit collateral in Acala, get the aUSD stablecoin issued by the protocol, send it to Ethereum, and buy other ERC-20 tokens on Uniswap.
However, for this to be successful, Acala also needs to create liquidity for its token on ethereum.
In addition, the bridge project SnowFork is trying to build a bridge chain between Ethereum and Polkadot parachains that does not require mutual trust to achieve the purpose of asset transfer, data interaction, and derivative product transactions.
In contrast, DeFi in Cosmos seems to be shying away from Ethereum. For example, Kava is a stable currency issuance project similar to MakerDAO built on Cosmos. So far, Kava has not used Ethereum, instead avoiding the leading smart contract platform. Instead, Kava is integrating assets like BTC, BNB, and XRP.
In the end which way can be successful, still need time to test.
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Top Investors Bet DeFi Will Migrate to Polkadot With $7 Million Betting
In August this year, Acala successfully obtained Series A financing from 15 well-known investors, including Pantera Capital, ArringtonXRP Capital, ParaFi Capital, CoinFund, DCG, SpartanGroup, etc.
Santiago Roel Santos, partner at ParaFi Capital, said:
“At ParaFi, we envision a DeFi ecosystem that can span multiple blockchains and believe this will be a win-win for the crypto industry. Acala is our first DeFi investment in Polkadot and our first investment in Ethereum We are encouraged by the pace of development and innovation in Acala and excited to join the team as a major DeFi hub for the Polkadot ecosystem.”
The round, led by Pantera Capital, raised a total of approximately $7 million for the development of the Acala-backed Token Trading Agreement (SAFT).
Since Ethereum's DeFi is not friendly to small and medium investors, such as the crazy increase in Gas fees, investors' demand for fast and cheap DeFi is growing, which may eventually lead to investors migrating from Ethereum to Polkadot.
Regardless of the short-term impact of Polkadot’s launch and Acala’s fundraising success, challenging the Ethereum ecosystem is extremely beneficial to everyone involved in crypto in the long run.
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Attack on Polkadot's Stafi, $205M Locked
Lianwen reported on August 24 that Leading Capital announced its investment in Stafi, a decentralized asset flow protocol for the Polkadot ecological project. Based on Substrate, Stafi aims to rely on the Web3 ecosystem and Polkadot's relay system to provide better liquidity for mortgage assets of different types, services, and purposes.
Stafi works in a similar way to various automated yield tracking protocols on Ethereum, but is currently limited to staking services. So far, Stafi has locked up $205 million worth of mortgage tokens, which are bonded through 1767 addresses.
In December 2019, Stafi received funding from the Web3 Foundation. In July this year, Stafi completed a $600,000 seed round of financing, with investors including FocusLabs, Spark Digital Capital and BitMax Incubator.
Stafi supports PoS token holders to mortgage their own assets and provides corresponding liquidity tokens for these pledged tokens. The goal is to allow users to enjoy the benefits brought by Staking and obtain the liquidity of mortgaged assets. This increases overall revenue.
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Stafi Collateral Token Image
In the current Ethereum-only DeFi space, the launch of Polkadot is very favorable, as gas fees on the network reached 500Gwei this week.
Additionally, Ethereum’s processing speed is around 10-15 transactions per second (TPS), while Polkadot can reportedly scale to 100,000 to 1 million TPS by implementing a parallel blockchain.
Investors have also taken note of these attractive technical features. The DOT token has surged 125% since regaining control of the coin on August 22. Its rapid ascent to the top ten cryptocurrencies, surpassing bitcoin cash and litecoin to reach $5.9 billion, shows confidence in the market.
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Other financing of Polkadot ecology
In addition, in October this year, Reef Finance, a Polkadot-based DeFi operating system, announced that it had completed a $3.9 million seed round of financing, with investors including NGC Ventures, AU21 Capital, QCP Capital, Kenetic Capital, and Woodstock Fund.
Denko Manceski, CEO of Reef Finance, said that in order to eliminate problems in the DeFi user experience, Reef provides a one-stop service that combines global liquidity aggregators, yield aggregators and asset management products.
Reef Finance has cooperated with Polkadot ecological projects, such as Plasm and the distributed storage protocol CrustNetwork, and the company also stated that it plans to integrate with oracle service providers such as Chainlink and Bluzelle. Prior to this, Leading Capital also announced its investment in ReefFinance.
On October 28, Litentry, the first decentralized cross-chain identity protocol in the Polkadot ecosystem, completed a $1 million seed round of financing. Participating investment institutions include FBG Capital, Candaq Group, Signum Capital, NGC Ventures, BlockVC, D1 Ventures, Altonomy, Hypersphere Ventures, PAKA Fund, Digital Renaissance Foundation, RockX, LD Capital, etc.
This is Litentry's first financing since it received Web3 Grants in 2019. The Litentry team stated that this round of financing will help the company strengthen its team and build a global community. Litentry will continue to focus on optimizing the technical architecture of its products and provide refined on-chain solutions for applications inside and outside the Polkadot ecosystem such as DeFi and on-chain governance. Identity credit service, jointly build a credible decentralized identity aggregator in the blockchain network, and become an important infrastructure in the Web 3.0 network, ready for large-scale application.
On September 15, Crust Network, a distributed cloud project based on the Polkadot parachain, announced the completion of the A round of financing. Investors mainly include NGC Ventures, AU21 Capital, Bitscale Capital, Chain Capital, DFG, HashCIB, IOSG, KR1, KNS Group, Lotus Capital, Origin Capital, SNZ, Bisheng Capital, Consensus Lab, Waterdrop Capital, and Taihe Capital, etc., the seed round strategic investor Chengdu Wuji Chain Technology continued to invest.
Crust Network also announced its partners Bitcoin.com, Bithumb, Darwinia and Maskbook. This round of investment institutions and partners will help Crust Network build a ubiquitous public cloud infrastructure in the future, improve the implementation of the core protocol and promote more application projects in the future. Built on Crust Network.
So, why does the Polkadot ecological project get so much attention?
In May of this year, Fenbushi Capital partner Huang Lingbo said when talking about investment opportunities in the blockchain industry, Fenbushi Capital will focus on two ecology and one track this year. The two ecology refers to "Polkadot (Polkadot) ecology and IPFS ecology". This year, we will focus on Polkadot's various parachains and the incentive layer in the IPFS ecology, such as Filecoin mining and the implementation of IPFS follow-up applications.
Li Kunyun, the founder of Delin Capital, even said that Polkadot, it is not too late to wait for you for three years.
