Financial institutions continue to look for ways to stack in the crypto market, and decentralized finance (DeFi) products are one such mechanism that can help them gain shares. Investors can earn return on their capital in DeFi products By lending your cryptocurrency for interest,
But DeFi lending is far more risky than traditional lending, partly due to the volatility of the asset class. Just as “high-yield” bonds compensate investors with more cash to bet on companies with higher-than-average risk, DeFi lending can offer far higher interest rates than a traditional savings account, in which Customers essentially lend their money to the bank.
line pipe is building a set of APIs that developers can use to build platforms that provide access to DeFi products. As VP of Product at crypto wallet BRD, which Coinbase acquired in November of last year, Conduit CEO and cofounder Kirill Gertman experienced firsthand the challenges of finding vendors who would provide the backend tools that would help his team. were essential to the creation of their user-facing product. After a stint at Arrival Bank and half a year as product chief at the consumer fintech eco, Gertman built Conduit to become the backend solution he was looking for but couldn’t find.
“When you look at the fintech side of things, there is already a huge stack that is built to support. If you want to issue cards you have Stripe, you have Marketa – any use. You can come up with the case, you have someone with an API who is willing to give it to you,” Gertman told Nerdshala in an interview.
Conduit aims to be a one-stop shop for Neobanks and financial institutions to plug their own products into the DeFi ecosystem, which Gertman said is made easier because Conduit is self-regulated and compliant, allowing companies to The compliance burden of using its own tools is removed.
For consumers to earn DeFi rewards, their fiat currency is first converted into stable coins, a type of cryptocurrency pegged to the value of the fiat currency, so it can be invested in various crypto protocols such as Compound and AAVE. could. Conduit offers two solutions to help companies reach these returns.
The first is its Growth Income Account, which Neobank offers its customers to invest their fiat currency in DeFi. The second is Conduit’s Corporate Treasury Solutions, which provides companies with high-yield DeFi accounts.
“We do bookkeeping, and we do a lot of things that basically makes a very simple bundle of [our clients], so they don’t have to worry about complications,” such as how to convert dollars into stablecoins or how to calculate rates, Gertman said.
Gertman declined to name specific Conduit customers, but said they fall into two categories – Neobanks and smaller cryptocurrency exchanges, especially in regions such as Latin America. Its biggest customers are in Canada, where its product first launched, and Brazil, and it wants to expand into markets including the US and Europe, Gertmann said.
He added that Gertman sees two benefits from expanding DeFi products. The first is access – the DeFi protocols are permissionless, allowing any user to lend and borrow money without a credit score, identity verification or providing collateral. The second is that DeFi connects users globally, allowing investors to earn high yields in countries with extremely low or negative interest rates, and for companies to borrow money at favorable rates by attracting from global liquidity pools. Gets easier, Gertman said.
Conduit says it plans to triple its headcount next year by hiring engineering, sales and compliance professionals with local knowledge in the North America and LatAm regions, which are completely remote. Regulation has played a role in which Conduit has targeted, he said, adding that a lack of regulatory clarity from the Securities and Exchange Commission (SEC) has slowed Conduit’s entry into the US.
To promote its global expansion, Conduit raised a $17M seed round led by Portage Ventures with support from Diagram Ventures, FinVC, Gemini Frontier Fund, Gradient Ventures and Jump Capital, the company announced today. Several fintech executives from firms including PayPal, Coinbase, Google Pay and others also participated in the round.
Conduit carries high legal costs to ensure it is compliant in all of its markets, so Gertman decided the company needed to raise an “average-to-average seed round.”
“Obviously, the market conditions helped us, and we took advantage of that, and I’m not going to hide that… even if there is a crypto winter or something like that, we can avoid it,” Gertmann said.