By Michael Scott
Term Labs confirms raising a $2.5 million seed round for Term Finance. The funding round attracted the leadership of Electric Capital. The round featured Circle Ventures alongside Coinbase.
Term Finance involves a decentralized finance (DeFi) protocol that facilitates interest borrowing. Term Labs revealed plans for the DeFi protocol to go live before April. The platform’s builder informed the institutional investors participating in the round of safeguarding their funds amid discovering multiple crypto scandals that aggravated the prolonged meltdown in 2022.
Electric Capital Leads Multiple Ventures in Term Finance Round
Term Labs lauded the input of MEXC Ventures and Robot Ventures for their contribution during the seed round. Also, the DeFi builder acknowledged the angel investment made by investors associated with developing various DeFi platforms, including Aura, Llama, Hashlow and Balancer.
Terms Labs regretted the calamitous decline of centralized lending operations amid the crypto scandals. Nonetheless, he lauded the stability portrayed by the DeFi sector. The decentralized platform builder cited the transparency prioritized in tamper-proof digital contracts.
Introducing Fixed Rate Lending in DeFi
The Term Labs representative observed that decentralized lenders often featured over-collateralizing and advancing crypto-backed loans. He observed such platforms offer variable rates. The executive indicated that such settings presented opportunities to introduce fixed-rate lending alongside interest-rate derivatives to the decentralized finance platforms.
Terms Labs chief executive Dion Chu indicated that Terms Finance would replicate the presence of mortgage-backed and treasury securities. He added such is integrated within conventional finance, and short-term lending is often overcollateralized. The arrangements lubricate the financial market.
In his address, Chu revealed that Term Finance would replicate a similar approach in the DeFi space as utilized within the money market.
Integrating Benchmarking Yield Curves
Chu lamented the absence of benchmarking yield curves for operators within the DeFi space. Consequently, he considered formulating lead yield curves for benchmarking would create a distinct difference for the sector.
Electric Capital’s Ken Deeter, the strategic advisor partner, lauded the unique arrangement of Term Labs’ model to originate scaled loans without slippage. Also, the business model is set to eliminate reliance on bid-offer spread and hidden transaction fees deployed in most lending protocols.