Sublime, a decentralized lending platform, said it raised $ 2.5 million in a funding round from Electric Capital, Galaxy Digital, FinTech Collective, Collab + Currency, Jill Carlson Gunter and Ryan Selkis.
The company will use the funds to develop its platform and launch it in the coming weeks.
Sublime users can verify their digital identity using their profiles on sites like Twitter, Github, and Instagram, putting their reputation as collateral in addition to non-fungible tokens, cryptocurrencies, or other blockchain-based assets.
The company announced next week that it will start its private alpha, allowing DAO (Decentralized Autonomous Organization) creators and contributors to secure future payments with complementary solutions that keep privacy in its roadmap.
Sublime said that traditional credit scoring methods are very data-intensive, which makes them susceptible to bias or to paint an incomplete picture of a borrower’s creditworthiness, especially for those with limited financial histories. This limits the pool of potential borrowers. In addition, this data does not exist on the chain or is otherwise highly manipulable.
The company said, “In the absence of legal repercussions or updates to its off-chain score based on on-chain activity, there are several flaws to be expected in the initial seed stage, a process that can take years to mature. It is not clear whether DeFi lenders are ready to absorb the risks of such almost certain defaults right now. ”
“A trader’s history on the farming chain of yield or over-collateralized borrowing is a poor indicator of his likelihood of repaying under-secured loans, which makes running any machine learning model on such data largely irrelevant, ”said Ritik Dutta, founder of Sublime.
“We’re excited about how open architecture enables a myriad of use cases – for example, DAOs can go into debt by issuing bonds based on pools with varying levels of seniority, or institutions can put in place of private lines of credit between them, “Avichal Garg, partner of Electric Capital, said.
“Positions in pools that are tokenized in ERC-20 assets allow users to create structured debt products in addition to Sublime,” he added.
Investors have continued to support startups in the crypto space.
In early October, cryptocurrency staking management platform Stader Labs raised $ 4 million in its startup funding round led by Pantera Capital.
In September, LayerZero, a multi-blockchain omnichannel interoperability protocols company, raised a $ 6 million funding round co-led by Binance Labs, Binance’s venture capital firm and incubator, and Multicoin Capital.
Meanwhile, cryptocurrency adoption has also increased in India, despite regulatory uncertainties. According to an October report by blockchain research firm Chainalysis, the country ranks among the top three in the world in terms of crypto adoption. Chainalysis noted that Indian investors were more mature than Pakistan and Vietnam – the other two in the top three – with more institutional investors joining the market.