Crypto Lender Credix Raises $11.2M Series A
Cryptocurrency credit startup Credix has raised $11.25 million in a Series A funding round, the Belgian company announced on Tuesday (September 6).
“Over the next decade, debt capital markets will be chained and democratized,” founder and CEO Thomas Bohner said in a blog post. “Credix is building the infrastructure to enable this at scale – we are developing a next-generation credit platform that matches institutional investors and FinTech borrowers.”
Bohner said his company aims to bridge the gap between decentralized finance (DeFi) and real-world assets (RWA). He said it has become clear that RWA can bring “sustainable and scalable growth” to the DeFi ecosystem.
The total DeFi market capitalization has fallen by 63% while Credix grew 20 times and originated more than $23 million in active loans in six months, Bohner said in the post. The company resides in Brazil and will soon expand to other emerging markets.
“Our platform now enables FinTech companies and other non-bank lenders to convert their receivables and real assets into investment capital,” Bohner said. “All funding happens on-chain using USDC and smart contracts, creating instant efficiency, settlement and more transparency.”
PYMNTS investigated the concept of decentralized crypto lending earlier this year, noting that it is more complex than its centralized counterpart, although the core mechanism is the same.
Read more: How does decentralized crypto lending work?
Lenders lock their crypto to a lending platform in exchange for interest – in some cases very high interest rates, or rates of return. Borrowers raise these funds by offering collateral worth 125% to 150% of the loan, which they get back after repaying the loan with interest.
If the value of the collateral cryptocurrency falls close to the value of the loan, borrowers receive a margin call. If they don’t respond in time – and the deadline could be soon if the token in question drops quickly – the collateral is liquidated for the borrowed amount, interest due and usually a liquidation fee.
Since borrowers typically take out these loans to raise liquidity without selling the underlying cryptocurrency, which they believe will continue to rise in value over the long term, this means they have paid more fees and had the security sold at a significant loss.
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