DAO Liquidity Provider Raises $18M in Round Led by Pantera Capital

Decentralized protocol Rift Finance has raised $18 million to help DAOs with liquidity as the sector heats up.

The round was led by Pantera Capital. Other investors include Two Sigma Ventures, Coinbase Ventures, Spartan Group, Defiance Capital, Hashed, Jump Capital, Vessel Capital and Morningstar Ventures. Angel investors include Terra’s Do Kwon, Aave’s Stani Kulechov, Polygon’s Sandeep Nailwal and Goldentree Asset Management’s Joseph Naggar.

DAOs (decentralized autonomous organizations) have grown tremendously in the past 12 months — in some cases, replacing traditional corporate structures.

Last month, Superdao Founder Yury Lifshits told Blockworks about 10,000 to 20,000 DAOs operate worldwide, but his firm anticipates up to one million new DAOs by the end of 2022 — as long as creators have the right tools. 

Rift Finance’s Co-founders CEO Austin King and Chief Technology Officer Tyler Tarsi also told Blockworks that DAOs need the right tools to succeed.

“There’s simply not much tooling out there to help DAOs achieve deeper liquidity,” King said. “This was one of the most obvious pain points in DeFi and a great way to add value early on and support the rest of the ecosystem.” 

The capital will be used to build out its team and the DAO community, as well as creating infrastructure, Tarsi said. 

In the early days of DeFi (decentralized finance), liquidity mining helped act as a bridge, but Rift Finance aims to create a long-term sustainable solution to shore up DAO treasuries.

The protocol wants to help DAOs deploy governance tokens to deepen token liquidity without having to give up ownership. It pairs governance tokens with ether from retail and institutional depositors. Ultimately, DAOs receive liquidity through its protocol, and depositors receive yields in return. 

“It’s a win-win type product to help DAOs and through that, we help expand the ecosystem,” King said.

Rift launched its beta product on Ethereum’s mainnet last year with a select number of DAOs, including Fantom, Terra, Injective, Unilend, Parsiq, Ramp and Marlin. Within a few days, the beta hit its $50 million total value locked cap.

“Using Rift, Fantom was able to begin controlling 32% of the FTM:ETH liquidity on SushiSwap in a single transaction,” Michael Kong, CEO of Fantom Foundation, said in a statement. “This demonstrates the power of Rift and we are excited to scale this technology out for the DAOs building in the Fantom ecosystem.” 

Going forward, Rift plans to launch its token liquidity infrastructure across layer-1 blockchain networks like Terra, Avalanche and Fantom.

Although it’s hard to know where the space will be, even six months from now, both King and Tarsi said the protocol plans to onboard hundreds of DAOs by the end of the year. 

“DAOs are human capital combined with other forms of capital like social capital, financial capital, and they add value systems on-chain” Tarsi said. “We really think DAOs can start to replace more traditional organizations.” 

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