Brisbane-based startup Reputation DAO, which aims to help decentralized financing platforms (DeFi) tackle its reputation for reducing the collateral needed to borrow, has a starting round of US$4.75 million (A$6.72 million). ) fetched.
The startup was backed by Sydney VC AirTree Ventures, DACM, Koji Capital and Framework Ventures.
DAO is building the foundational infrastructure, powered by Chainlink, to spawn a comprehensive credit system in DeFi – the equivalent of a credit scoring system in traditional finance – to unlock collateralised loans for a wider range of use cases and mainstream DeFi to make.
The funding is intended to develop the startup’s reputation infrastructure and scoring product. The analytics can map non-blockchain data such as AML/KYC, traditional credit scores and social media data to improve the assessment of account-specific risk metrics delivered in smart contracts to facilitate hundreds of billions in loans.
Founded by Pat McNab and Ash Morgan in 2019 as part of myceliuman Australia-rooted global network building next-generation transaction technology, Reputation DAO provides a verifiable, decentralized and programmable reputation service for DeFi.
McNab said a lack of reputation and identity services in DeFi, combined with lending platforms that require >100% collateral, means that the potential capital that can flow into DeFi is limited.
“While DeFi provides an alternative rail for finance development, there is an abundance of financial data related to risk, credit and identity that can be used to unlock new applications within DeFi, such as unsecured loans,” he said.
“Interoperability between DeFi and traditional finance is integral to being on board with trillions of dollars of capital and billions of users. Reputation DAO provides the channel for this data to flow into smart contracts, providing greater security, rates and guarantees.
AirTree Ventures Partner John Henderson said DeFi lending markets are “fighting traditional one-handed lending platforms” because those loans have too much collateral.
“DAO’s reputation will help break down this barrier, unleashing the power of borrowing and lending through DeFi,” he said.
“Pat, Ash and the Reputation DAO team are building a leading line of crypto projects. We are excited to support them as they build out this critical piece of financial infrastructure.”
Chainlink co-founder Sergey Nazaroz has signed on as an advisor to the startup, saying the lack of a comprehensive credit system for DeFi is one of the missing links hampering its growth.
“By enabling the secure transfer of real-world data to blockchains, Chainlink Reputation DAO will help unlock the reputation infrastructure needed to accelerate the global adoption of DeFi,” he said.