Ondo Finance, a decentralized finance (DeFi) protocol launched by two former Goldman Sachs employees, has raised $4 million in a seed equity funding round.
Pantera Capital led the round, with Genesis, Digital Currency Group, CMS Holdings, CoinFund, and Divergence Ventures participating, among others. Angel investors such as Stani Kulechov (Aave founder), Richard Ma (Quantstamp founder), and Christy Choi (former head of investments at Binance) also backed the round.
Ondo Finance is an Ethereum-based DeFi protocol that lets users originate loans backed by crypto to earn yield. Lenders and borrowers contribute capital together in "Ondo Vaults," which use smart contracts to enforce loan provisions. There are two types of positions in Ondo’s initial vaults: fixed yield and variable yield. Fixed yield vaults seek to deliver a stable yield, and variable yield vaults seek to maximize returns by using leverage.
Ondo CEO Nathan Allman, a former staff of Goldman's Digital Assets team, explained how the vaults work, using the example of the Ondo USDC-ETH Uniswap vault. This vault breaks down the yield earned from providing liquidity to the Uniswap USDC-ETH pool into fixed yield and variable yield positions. Users can deposit into the fixed yield position with USDC and earn a stable yield for a fixed duration, or they can deposit into the variable yield position with ETH and earn leveraged exposure on the yields from the USDC-ETH Uniswap Liquidity Pool, said Allman.
"Ondo users can invest in both positions in any ratio they choose, creating their own customized return profiles," Allman added.
Ondo's other co-founder, Pinku Surana, was a vice president at Goldman Sachs in a technology team. Surana led Goldman's blockchain research and development team, providing the technical expertise for these initiatives.
With fresh capital at hand, Ondo is looking to expand its current team of around ten by hiring mostly engineers, said Allman. It is also looking to support more blockchains and launch more yield strategies, he said.
Looking at the future, Ondo also plans to launch its own token and a decentralized autonomous organization or DAO, said Allman. "We think DAOs are the best organizational structure to align community incentives with the future success of the protocol, as well as to promote transparent and distributed development and decision making."
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