Crypto Conduit API provider wants to be the decentralized finance gang – TechCrunch
Financial institutions continue to look for ways to enter the crypto market, and decentralized finance (DeFi) products are one mechanism that could help them capture shares. Investors in DeFi products can earn a return on their capital by lending their cryptocurrency in exchange for interest.
But DeFi loans are much riskier than traditional loans, in part because of the volatility of the asset class. Just as “high yield” bonds pay investors more money to bet on riskier-than-average businesses, DeFi loans can offer much higher interest rates than the traditional savings account in which customers basically lend their money to a bank.
Conduit creates a set of APIs that developers can use to build platforms that provide access to DeFi products. As vice president of products for the BRD crypto wallet, which Coinbase acquired in November last year, Conduit CEO and co-founder Kirill Gertman faced challenges in finding vendors who would provide the core tools including his team needed to create his product aimed at users. After a stint at Arrival Bank and six months as a product manager at Consumer Fintech Eco, Gertman created Conduit to be the backend solution he was looking for but couldn’t find.
“When you look at the fintech side of things, there is already a huge stack that has been designed to support that. You have Stripe, you have Marqeta if you want to issue cards – whatever use case you can come up with, you have someone with an API that’s ready to give it to you, ”Gertman told TechCrunch in an interview.
Conduit aims to be a one-stop-shop for neobanks and financial institutions to connect their own products to the DeFi ecosystem, which Gertman says is made easier because Conduit itself is regulated and compliant, thus easing the burden of compliance. of companies using its tools.
In order for consumers to earn DeFi returns, their fiat currency is first converted into stablecoins, a type of cryptocurrency indexed to the value of fiat money, so that it can be invested in various crypto protocols like Compound and AAVE. Conduit offers two solutions to help companies access these returns.
The first is its Growth Gains Account, which neobanks offer customers so they can invest their fiat currency in DeFi. The second is Conduit’s corporate treasury solution, which offers high-yield DeFi accounts to businesses.
“We do the bookkeeping, and we do a lot of things that basically create a very simple package for [our clients], so they don’t have to worry about the complexities, “like how to convert dollars into stable coins or how to calculate rates,” Gertman said.
Gertman declined to name specific clients of Conduit, but said they fell into two categories: neobanks and small cryptocurrency exchanges, especially in regions like Latin America. Its biggest customers are in Canada, where its product was first launched, and Brazil, and it is looking to expand into markets such as the United States and Europe, Gertman said.
Gertman sees two types of benefits in expanding DeFi products, he said. The first is access – DeFi protocols are authorization-free, allowing any user to lend and borrow funds without having to provide a credit score, identity verification, or collateral. The second is that DeFi connects users globally, allowing investors in countries with extremely low or negative interest rates to earn higher returns, and making it easier for businesses to borrow money. money at great rates by tapping into a global liquidity pool, Gertman added.
Conduit has announced plans to triple its workforce, which is fully isolated, over the next year in the North America and LatAm regions by hiring engineering, sales and compliance professionals. with localized knowledge. Regulation has played a role in the countries Conduit has targeted, he added, saying a lack of regulatory clarity from the Securities and Exchange Commission (SEC) has slowed Conduit’s entry into states. -United.
To fuel its global expansion, Conduit has raised a $ 17 million funding round led by Portage Ventures, with backing from Diagram Ventures, FinVC, Gemini Frontier Fund, Gradient Ventures and Jump Capital, the company announced today. A number of fintech executives also participated in the round, from companies such as PayPal, Coinbase, Google Pay and others.
Conduit incurs high legal fees to ensure it is compliant in all of its markets, so Gertman decided the company needed to raise a “larger than average seed round,” he said.
“Obviously the market conditions helped us, and we took advantage of it, and I’m not going to hide it… Even if there will be a crypto winter or something like that, we can survive it,” said Gertman.