DeFI

DeFi lending service raises $6.1M to improve capital efficiency

The funding round highlights the increasing demand for solutions to the critical challenges plaguing DeFi lending, underscoring the urgent need for innovative solutions.

Altitude, a DeFi lending service that brings capital efficiency by automating dormant funds in overcollateralized loans to seek additional yield opportunities, today announced the completion of a $6.1 million seed round of financing.

Blockchain technology has opened the door to lending mechanisms that hadn’t been possible before. Now, users can borrow funds without any credit history, Know Your Customer (KYC) verification, or even registration.

By leveraging permissionless infrastructure and unique economic practices, lending has quickly become the main use case in decentralized finance (DeFi), accounting for over one-third of the total value locked (TVL) in DeFi apps as of the end of 2023.

Nevertheless, DeFi lending is still far from mainstream adoption, and the unique advantages come at a price, namely over-collateralization.

With no credit history and registration, borrowers must lock in an amount of crypto that exceeds the loan’s value as collateral.

A common scenario involves a borrower providing their Ethereum ETH$2,383 or Bitcoin BTCtickers down$45,483 as collateral and borrowing USD-denominated stablecoins.

The loan-to-value (LTV) ratio, which measures how much one can borrow relative to the collateral, is often set at low levels to minimize the risks to lenders caused by the price volatility of the collateral.

While safer for lenders, low LTVs result in significant unused capital sitting idle and untapped. This creates high capital inefficiency in the DeFi lending and borrowing markets.

Novel approach to DeFi lending raises $6.1 million

Achieving capital efficiency for collateralized debt is a difficult task, but Altitude, a novel DeFi lending service, has found the solution.

The protocol automates the management of collateralized debt by adjusting the LTV ratio in real-time.

With this approach, capital efficiency can be maximized while maintaining a safe liquidation risk profile.

challenges plaguing DeFi lending
Dormant capital for a loan started at 30% LTV. Source: Altitude

Altitude is only starting its journey, but it has already attracted interest from major players and recently completed a $6.1 million seed round.

Previously, the protocol secured $2.1 in pre-seed funding from a pool of Web3 builders and then raised a further $4 million from Tioga Capital, New Form Capital, Flow Ventures, UDHC, GSR, Owl Ventures, alongside prominent angel investors, such as Marc Zeller of AAVE as well as others, to close out the round.

Commenting on the investment, Michiel Lescrauwaet, managing director at Tioga Capital, said:

“Crypto lending is already a cornerstone of the DeFi sector, but its full potential remains untapped. Altitude’s novel approach will catalyze the next wave of growth by giving DeFi investors peace of mind while generating better yields.”

Closed beta coming soon

The risk of liquidation or human error is greatly reduced through automation, as Altitude’s algorithms do all the work behind the scenes in real time to achieve capital efficiency.

Altitude has completed on-chain testing and will soon move to a closed beta, available to whitelisted addresses, followed by a full launch.

As the protocol gains traction, the company plans to expand to other EVM-compliant L1/L2s and integrate with all leading lending protocols and yield sources.

Learn more about Altitude

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