Meet Clearpool, the lending platform at the forefront of ‘DeFi 2.0’

Earlier this month, Jane Street Capital, one of the world's biggest market makers, said it was pushing into decentralized finance (DeFi) as it planned to borrow up to $25 million in the stablecoin USDC. 

The funds, it said, would be borrowed through Clearpool, a marketplace that provides uncollateralized liquidity from a network of lenders.

The deal with Jane Street, which Clearpool CEO Robert Alcorn says “opens the floodgates," brought the little-known marketplace with ambitious plans into the spotlight. 

'DeFi 2.0'

Clearpool is part of a new wave of DeFi, often called "DeFi 2.0," which looks to open the door to previously untapped lending opportunities in crypto. This new school of lenders, which also includes peers like Maple Finance and TrueFi, could bring a huge influx of capital from traditional credit markets.   

As with many things in crypto, the idea behind Clearpool has not taken long to materialize. Back in September, it was part of a Hex accelerator and had just raised a relatively modest $3 million seed round. Investors in that round included Arrington Capital, GBV Capital, HashKey Capital, Hex Trust, Sequoia Capital India, Sino Global Capital and Wintermute. 

Clearpool then launched on the Ethereum blockchain in March. The Jane Street deal, says Alcorn, the first of a “high single-digit number” of similar deals in the pipeline. 

The only asset Clearpool supports right now is USDC. This could also change in the future, however, in response to demands from clients. “We want to make sure what we support are good quality liquid assets,” says Alcorn, adding that other options would be decided by a governance vote. 

Alcorn says that the platform has no plans to raise money again in the near future, but that it has been approached by a number of funds that use the protocol. “We often listen to these proposals and consider them,” he says, adding that the team has been focused on building in a fast-moving market rather than raising. 

Permissionless pools

While its institutional pools have grabbed most of the attention, the thing Alcorn feels makes Clearpool stand out from the crowd in crypto is its permissionless pools. These are continuous pools with no maturity date, a thing Alcorn describes as being almost like revolving credit facilities.

“There’s nothing like it in DeFi or tradfi,” he says. “It’s really a bigger story than Jane Street or anyone else opening a permissioned pool.”

Alcorn goes on: “For borrowers, there are no set interest payment dates or amounts — it’s very dynamic and flexible from their perspective. And because they’re single borrower pools it means you can build a credit profile within DeFi.” 

All borrowers on Clearpool are institutions, which have to pass a stringent KYC/AML process to verify their identity before they can open a pool. Meanwhile, there are no requirements for lenders. Lending to a borrower pool is permissionless and requires only an in-browser crypto wallet like MetaMask.

Lenders can lend to who they like and take on more or less risk depending on their appetite. When lenders offer their money to pools, they receive the protocol’s native token CPOOL. Recipients can then stake these to earn additional yield. 

“Those tokens really are the building blocks for other risk management solutions, like interest rate swaps and credit derivatives,” explains Alcorn. “It’s 100% driven by the forces of the market — by supply and demand. It’s very pure — there’s no way of interfering with or manipulating that.”