Crypto Lender Credix Raises $11.2 Million in Series A

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Cryptocurrency lending 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 on-chain and democratized,” founder and CEO Thomas Bohner said in a blog post. “Credix is ​​building the infrastructure to enable this at scale – we are building a next-generation credit platform connecting institutional investors and FinTech lenders.”

Bohner said his company aims to bridge 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.

DeFi’s total market cap fell 63% while Credix grew 20x and generated more than $23 million in active loans in six months, Bohner said in the post. The company is based in Brazil and will soon expand to other emerging markets.

“Our platform now enables FinTech companies and other non-bank lenders to convert their real receivables and assets into investment capital,” Bohner said. “All funding happens on-chain using USDC and smart contracts, creating instant efficiencies, settlement, and more transparency.”

PYMNTS reviewed the concept of decentralized crypto lending earlier this year, noting that it is more complex than its centralized counterpart, although the basic mechanism is the same.

Read more: How does decentralized crypto lending work?

Lenders lock their crypto into a lending platform in exchange for interest – in some cases, very high interest rates or returns. Borrowers acquire these funds by posting collateral worth 125% to 150% of the loan, which they get back after repaying the loan with interest.

If the value of the collateralized cryptocurrency declines close to the value of the loan, borrowers receive a margin call. If they don’t respond in time – and the deadline may be approaching if the token in question drops quickly – collateral is liquidated for the amount borrowed, interest due, and usually a liquidation fee.

As borrowers typically take out these loans to provide liquidity without selling the underlying cryptocurrency, which they believe will continue to increase in value over the long term, this means they have paid several fees and their collateral has was sold at a substantial loss.

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