Level Protocol Secures Funding to Boost $80M DeFi Yield Token

In a significant move for the decentralized finance (DeFi) landscape, stablecoin protocol Level has successfully raised a new round of venture capital aimed at expanding its $80 million yield-paying stablecoin. This comes at a time when the demand for yield-generating digital asset offerings is on the rise, reflecting a broader trend in the cryptocurrency market.

Fresh Capital Raise Led by Dragonfly Capital

Peregrine Exploration, the development firm behind Level, has secured an additional $2.6 million in funding, with early backer Dragonfly Capital leading the investment round. Notably, Polychain also participated in this funding initiative. Founders David Lee and Kedian Sun shared insights about this development in an interview with CoinDesk.

New Investors Join the Ranks

The latest funding round has attracted a diverse group of new investors, including Flowdesk, Echo syndicates, Native Crypto, and Feisty Collective by Path. Additionally, angel investors such as Sam Kazemian of Frax and Albert Chon of Injective have also joined the initiative, signaling strong confidence in Level’s potential.

Competing in the Booming Stablecoin Market

Level, with its innovative lvlUSD token, is positioning itself within the rapidly growing stablecoin asset class, which has become one of the most attractive sectors in the cryptocurrency space. Stablecoins, which are cryptocurrencies pegged to a stable asset like the U.S. dollar, play a crucial role in facilitating trading and transactions on blockchain networks.

However, many of the largest stablecoin issuers do not typically offer yield to users on the assets held in their backing reserves. For instance, Tether reported a staggering $13 billion in profits last year, largely attributed to the U.S. Treasury yield backing its $143 billion USDT token. This gap in the market has paved the way for a new generation of yield-earning stablecoins, which are gaining traction among crypto investors.

Rise of Yield-Earning Stablecoins

One notable example is Ethena’s USDe, which has rapidly grown to a supply exceeding $5 billion within just over a year, utilizing a market-neutral carry trade strategy that capitalizes on futures funding rates. Additionally, tokenized versions of money market funds and Treasury bills have emerged as alternative stablecoin options, further diversifying the market.

Yield Generation Through DeFi Protocols

Level’s stablecoin offers investors the opportunity to earn yield by deploying the backing assets on decentralized finance (DeFi) lending protocols such as Aave. This innovative approach automates reserve management, allowing users to mint lvlUSD by depositing Circle’s USDC or USDT stablecoins. By locking up (staking) these tokens, users can lend them out to generate yield on-chain.

As of last week, the annualized yield for the staked version of lvlUSD stood at an impressive 8.3%, surpassing the yields offered by tokenized money market funds. This competitive edge has positioned lvlUSD as a compelling option for investors seeking attractive returns in the stablecoin market.

Integration with DeFi Protocols

Furthermore, lvlUSD has been integrated with various DeFi protocols, including Pendle, Spectra, and LayerZero, enhancing its utility within the ecosystem. Users can also leverage lvlUSD as collateral on Morpho, expanding its functionality and appeal.

Transparent Approach to Yield Generation

Sven Wellmann of Polychain, one of the investors in the protocol, highlighted that Level’s fully on-chain and transparent approach to yield generation distinguishes it from competitors that rely on opaque, centralized methods. This commitment to transparency is likely to resonate with investors who prioritize security and clarity in their financial dealings.

Outpacing Rivals in Yield Offerings

According to recent reports, Level’s protocol has outperformed rival stablecoins in terms of yield offerings over the past month. This competitive advantage has contributed to its supply surpassing $80 million within just five months since its beta launch, showcasing the growing interest in its innovative stablecoin solution.

Plans for Future Expansion

With the latest influx of funding, Level is poised to expand its team and enhance its marketing efforts. Kedian Sun explained that the protocol aims to continue broadening the utility of lvlUSD beyond mere staking. Additionally, Level plans to leverage Morpho to generate yield in the coming weeks, further solidifying its position in the DeFi landscape.

Conclusion

As the demand for yield-generating stablecoins continues to rise, Level Protocol’s innovative approach and recent funding success position it well for future growth. With a focus on transparency, competitive yields, and strategic partnerships, Level is set to make a significant impact in the evolving world of decentralized finance.

For more information, you can read the original article here.