Porter Finance Has a New Idea To Help DAOs Grow: ‘DeFi Bonds’

Blockworks Exclusive: The Ethereum dApp will let DAOs raise funds akin to issuing fixed-rate corporate debt


Meyer fleshed out the idea for Porter Finance on a climb of Mount Kilimanjaro in Tanzania in September 2021 | Source: Shutterstock


key takeaways

  • Porter Finance has closed a $5 million seed funding round for its DAO credit marketplace
  • Included in the round were ParaFi Capital, Dragonfly Capital, Nascent Ventures, Buckley Ventures, Robert Leshner, Kain Warwick, Tyler Ward, Joey Santoro and Sam Kazemian

When a DAO with a treasury full of tokens wants to raise cash for operations, its main option currently is to sell tokens, either through private sales or on the secondary market. Porter Finance plans to give these DAOs (decentralized autonomous organizations) a new strategic tool that’s more like issuing corporate bonds.

The platform will let DAOs borrow stablecoins at fixed rates, using their project’s tokens as collateral, with no liquidation risk. This is effectively a zero-coupon bond sold to investors seeking a fixed income, Porter Finance’s founder Jordan Meyer told Blockworks.

“No one has built out a DAO-friendly solution for borrowing yet, until now,” Meyer said.

The platform will enable DAOs to deposit collateral from their treasury, create a “DeFi bond” offering, at a discount to investors, and then let them repay the loan at the maturity date with interest set by the market.

“We are allowing the DAOs to choose how they want to structure [the offering]. The DAO can choose to allow-list the offering, and only allow KYCed or accredited investors or, if they want, they can make a public offering — it’s up to them,” Meyer added.

The platform’s front end will initially be designed to exclude users from the US or any sanctioned countries, due to regulatory uncertainty.

There are some important differences compared to bonds in traditional finance, namely the risk profile. DAO-issued bonds will not be senior in any corporate capital stack, nor are the contracts open to enforcement in bankruptcy, which is not practical for loans to DAOs. Instead, they are secured by the collateral in the Porter Finance smart contracts.

Lenders take on some directional price risk of the underlying collateral asset, but in exchange they receive an option premium set by the market at the time of the offering.

“That option premium — and that discount — gets priced during the auction. Market participants who are bidding, they decide what the implied volatility is for them, what the option should be priced at, essentially the market risk they are taking,” Meyer explained.

For the DAO borrower, the system provides a mechanism to finance working capital for operations without putting downward pressure on their treasury token price, losing governance rights or risking liquidation in a money-market fund like Rari Capital Fuse pools — now part of the Tribe DAO.

A fortuitous climb

Meyer fleshed out the idea for Porter Finance on a climb of Mount Kilimanjaro in Tanzania in September 2021.

“You have 15 pounds on your back, but there are these other people who are helping you called porters…you would never make it up the mountain, in this 7-day trek, if you didn’t have the porters to carry the bags for you, or to help you up — and that was really impactful on me,” recalled Meyer, who named the protocol after these hardworking enablers.

The original logo of Porter Finance

“We want to be able to empower DAOs to reach their peaks, their summits and their financial goals.”

The original logo of the platform was a green backpack, inspired by the packs porters carry, Meyer said, adding it was unfortunately mistaken for a robot. Its branding has since been revised in advance of a planned June launch on the Ethereum mainnet, following smart contract audits by Secureum and Spearbit.

“We’ll go where the DAO treasuries are, and right now that’s Ethereum,” Meyer said.

A “massive market”

Porter Finance has closed a $5 million seed round with investments from ParaFi Capital, Dragonfly Capital, Nascent Ventures, Buckley Ventures, Robert Leshner, Kain Warwick, Tyler Ward, Joey Santoro and Sam Kazemian.

Nascent’s co-founder Dan Elitzer told Blockworks he jumped at the chance to back Porter after discussing a similar concept with Ben Forman, ParaFi’s founder and managing partner.

“Corporate debt is just an absolute massive market. And companies, if they have cash needs, they don’t just go and sell more shares…debt-based financing just makes a lot more sense — effectively cheaper capital,” Elitzer said.

“This is an important additional tool that DAOs should have in their toolbox,” he said.

Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.


Upcoming Events

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Screenshot 2024-05-23 091855.png


Bitcoin L2s aim to boost scalability while preserving decentralization and security, unlocking a better user experience, and new avenues for Bitcoin-powered innovations. However, no existing Bitcoin L2 leverages the full security of Bitcoin.


Also, toncoin could be crypto’s next blue-chip token


I believe that the innovation happening on Bitcoin right now is what will ultimately lead to a better Bitcoin for everyone


The payments firm is exploring PYUSD’s payments use cases


Planned funds would not stake their holdings, which some say will hurt the ETFs’ appeal for certain investors


Solana validators voted in favor of a proposal that would send 100% of priority fees to validators


In November, an iteration of the survey found that 34% of respondents were paying attention to crypto, but that figure has since jumped to 41%