Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
With this additional funding, Rift Finance seeks to solve some of the fundamental issues for DAOs and further expand its services to other Layer 1 blockchain networks.
On Tuesday, February 8, protocol-based liquidity provider Rift Finance raised $18 million in a recent funding round led by Pantera Capital. Rift specializes in offering protocol-based liquidity to decentralized autonomous organizations (DAO).
Rift Finance hasn’t yet disclosed at what valuations has it raised the recent funding. In addition to Pantera, some of the other participants in the funding round include big names like Two Sigma Ventures, Coinbase Ventures, Defiance Capital, Spartan Group. Vessel Capital, and Morningstar Ventures.
Rift – Solving the Ownership Issue in DAO
Decentralized Autonomous Organizations (DAOs) often work with a common mission of shared treasury. These DAOs issue tokens for governance and utility purposes. Besides, they also use these tokens for liquidity mining for incentivizing user deposits.
However, a large number of market critics argue that liquidity mining offers imperfect incentivization. They often attract temporary “farmers” who soak up all the rewards at the early stage but run leave at the time of liquidity crunch.
Rift Finance addresses this issue by allowing DAOs to deploy governance tokens from their treasuries without giving up on their ownership. The Rift protocol later creates liquidity pools by pairing a governance token from retail or institutional depositors who later receive high yield for their participation. In a press release shared with CoinDesk, Two Sigma Ventures principal Andy Kangpan said:
“Protocols have limited tools to generate sustainable liquidity for their network, which is a critical objective throughout their entire lifecycle. It has become unsustainable for projects to rely solely on liquidity mining, which is expensive and attracts mercenary capital to their ecosystem. Rift will usher in a new era for any tokenized organization looking to generate sustainable liquidity.”
The Latest Developments by Rift
On Tuesday, Rift Finance also opened up an early access waitlist for depositors seeking high-yield exposure to DAOs with the Rift ecosystem. Last year, Rift Finance had already launched its beta product with a selected group of DAOs on the Ethereum mainnet. It was also available to other platforms like Terra, Fantom, Ramp, and Injective. the beta launch received a strong response reaching %50 million in TVL in days of launch.
Now Rift is planning to expand its services across additional Layer 1 blockchains. Rift is currently among a growing number of protocols offering an alternative to liquidity mining.