• Polychain Capital Contributes $32 Million to DeFi Lending Protocol Element Finance

  • Element Finance, a Decentralized Finance (DeFi) lending protocol, announced today that it has raised $32 million in a funding round led by blockchain investment firm Polychain Capital.

    Polychain was not the only major backer who threw their support behind the protocol.

    Andreessen Horowitz, a venture capital firm focused on technology, contributed more capital in this round after previously contributing. Individual investors from Aave, MakerDAO, Synthetix, UMA, and many other crypto projects joined the round, as did investment firms Republic, Advanced Blockchain, and Rarestone.

    On June 30 of this year, Element Finance’s DeFi lending protocol went live, allowing users to purchase cryptocurrencies such as Bitcoin, Ethereum, and USD Coin at a discount.

    This is how it works.

    What exactly is Element Finance?

    If you have 0.8 ETH in your account, you can exchange it for 1 ETH at a reduced price. Element Finance then divides the asset into two tokens: one for the principal position (1 ETH) and one for the yield (a fixed yield of 0.2 ETH).

    The maturation period is the amount of time that users can keep their principal position token. At the end of that period, they will be able to resell the discounted token for its full value. They can also sell it at any time before the maturity date, but the further away the token is from its maturity date, the more discounted it is. In any case, they’ll still be able to reap the benefits of their yield tokens.

    Because DeFi interest rates are largely determined by demand, they can and frequently do fluctuate dramatically over the course of a user’s ownership of a specific cryptocurrency. To combat this, protocols such as Element Finance trade crypto assets at a discount until they reach maturity.

    The protocol also allows developers to create new DeFi products and services on top of its open-source infrastructure.

    Element Finance’s expansion since its inception

    Element Finance has expanded rapidly in the last four months. According to DeFi data aggregator DeFiLlama, the total value locked (TVL) on Element Finance has already reached $167.14 million. According to marketing materials, it currently has over 9,000 active users.

    The funds raised in this new round of funding will be used to expand the Element Finance team in several key areas, including engineering, research, user interface, and design.

    Olaf Carlson-Hansen, co-founder and CEO of Polychain Capital

    Wee described Element Finance as a “breakthrough financial primitive that has quickly become a cornerstone of DeFi and, we believe, will soon be a core piece of our global financial infrastructure.”

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