Lisbon, Portugal, July 6, 2022, Chainwire
Altitude has secured a $2.1 million funding round from several prominent builders and angels in the Web3 ecosystem
Altitude (Altitude.fi), a decentralized finance (DeFi) protocol that offers a first-of-its-kind actively managed collateralized loan that uses the volatility of collateral value to amortize itself over time, has closed a multi-tier funding round. prominent investors deeply involved in the Web3 space.
Investors include a number of prominent angels in the Web3 space:
Danish Chaudhry, Batuhan Dasgin, Benedikt Schulz, Dermot O’Riordan, Evgeny Gokhberg, Fabian Wetekamp, Georgi Georgiev, Kay Meyer, Lyuben Belov, Winslow Strong, Xin Wang, and many others.
Loans in the decentralized finance (DeFi) space are generally collateralized and a common trend among cryptocurrency investors is to use their cryptocurrency holdings (i.e. bitcoin, ether, etc.) as collateral and borrow against them. This allows long-term believers in crypto to keep their investment portfolio intact while unlocking liquidity.
The main challenge of using crypto assets as collateral is related to the notorious volatility of the crypto markets. It is considered normal for the bitcoin price to fluctuate up and down by a large percentage in a single day. If the price goes down, the loan could run out of collateral and eventually be paid off.
Given the constant volatility of the crypto markets, such liquidations are not uncommon and therefore borrowers need to be very careful when choosing the amount of collateral for their loans. The trade-off is their capital efficiency, that is, striking a balance between how much they can borrow against their holdings against the probability of liquidation.
The second challenge with DeFi lending is that interest rates can fluctuate between lending platforms, meaning a borrower may borrow from one lending platform only to find that the next day their rate has gone up. significantly higher than other available rates.
This is where Altitude comes into play.
Altitude itself is not a lending platform, but rather a protocol that handles lending and collateral on the major platforms in the DeFi space. When someone borrows through Altitude, the protocol actively manages both the loan and the collateral in real time, based on market conditions to optimize the loan.
How does it work?
Once someone borrows through Altitude, the protocol continuously scans major lending platforms for a lower interest rate, and as soon as it detects one, the loan is automatically refinanced, ensuring that borrowers always borrow at the lowest rate available.
On the collateral side, the protocol monitors the value of collateral provided, and while the loan is overcollateralized, it automatically engages unused collateral to generate yield by deploying funds on relevant platforms that provide yield. If the value of the collateral decreases, the protocol automatically rebalances itself to maintain a healthy loan-to-value ratio, and as the value of the collateral increases, the protocol deploys more funds to generate additional yield.
The net effect for borrowers is that the yield generated by the protocol is used to pay down their loan, in effect automatically repaying the loan over time.
Since capital is managed like a vault, individual borrowers are never exposed to full gas fees, making rebalancing between lending pools and yield platforms efficient even for small borrowers.
It is only possible to do this in a fully automated way due to the trustless and composable nature of decentralized finance, where Altitude can move funds through protocols to achieve high degrees of capital efficiency through automation. The funding will be used to expand the Altitude team to continue developing the protocol.
Altitude provides you with active management of your secured debt positions, so you can focus on more important things in your life. When you borrow through Altitude, your debt is financed through one of the major pools at no cost to you and therefore there is no financial downside to you when you borrow through the protocol.
You can find more information about how the protocol works here:
- dan edelmann
- [email protected]