AlloyX Secures $2M Pre-Seed Funding, launches investment vault with T-bills and Credix’ LP tokens to bring composability and efficiency to RWA

When real-world assets (RWA) such as fintech loans are fractionalized into digital tokens, crypto capital can fuel economic activity, expanding access to capital and widening the investor opportunity set. The rise of tokenization on blockchains allows crypto investors to diversify and benefit from high investment yields linked to traditional businesses and lending strategies, a vertical known as “real-world assets”. This segment of decentralized finance (DeFi) has boomed to more than $530 million1 in active loans to date. However its full growth potential is constrained by limited liquidity, cash drag and lack of composability. That’s about to change.

We’re thrilled to announce the AlloyX launch of a liquid RWA vault offering with Credix’s Liquidity Pool and U.S. T-bills after closing a $2 million2 pre-seed funding round, led by Hack VC. Additional investors include Circle Ventures, DCG, Stratos, Lecca ventures, MH Ventures, Early Ventures Archblock, dao5 and Credix Finance.

What is AlloyX?

AlloyX is a DeFi protocol that aggregates tokenized credit, bringing liquidity, composability and efficiency to the real-world asset ecosystem. We help protocols, decentralized autonomous organizations (DAOs), and institutional investors provide liquidity to tokenized credit on chain while reducing cash drag. Tokenized credit refers to digital tokens backed by real-world credit assets, such as loans or debt instruments.

Our aggregation platform empowers users to build and customize investment strategies according to their yield, risk, and liquidity preferences. We aggregate investments from nearly every credit and U.S. Treasury protocol, including Credix, Goldfinch, Centrifuge, Flux Finance and Backed Finance, to name a few. Through this innovative approach, investors tap into the highest volume of RWA loans, via vaults optimized to deliver attractive yield and liquidity.

How RWA Vaults Work

The next investment vault on our platform will blend tokenized private credit from Credix Finance with tokenized U.S. T-bills to form a diversified strategy. Vaults on AlloyX operate on a simple yet powerful principle: lenders provide capital in the form of USDC to a vault that aggregates assets of deposited tokens, which are allocated and run according to vault’s preset parameters. By depositing USDC, users receive vault tokens, based on a floating exchange rate and earn a yield. What sets AlloyX apart is its automatic allocation across multiple credit protocols, where USDC is deployed according to the vault’s allocation rules.

To cater to investor preferences, users also have the option to create their own vaults after obtaining the approval of the AlloyX DAO. These customized vaults can invest in whitelisted assets from our partner credit protocols. Once funds are deposited in the vault, the allocated funds are channeled to partners such as Credix, which serves as the platform for capital to flow from DeFi to real world off-chain borrowers.

Repayments made by underlying borrowers flow through the credit protocols back to the vault on the AlloyX platform. Depending on their liquidity needs, investors can then redeem their share of the repayments, either in the form of vault tokens or by converting them to USDC.

Every entity investing and redeeming from the AlloyX platform completes know-your-customer (KYC) with our compliance partner, Parallel Markets, saving them time and resources from going through multiple KYC processes with individual protocols.

AlloyX creates a seamless and efficient ecosystem, allowing users to customize strategies in the tokenized credit market, earn yields on their capital, and benefit from the automatic reinvestment of repayments.

Overcoming Challenges of Tokenized Credit

AlloyX is developed by a team with deep expertise in fintech lending, credit underwriting, investing, and blockchain technology. While investing in RWA, the core founding team experienced firsthand the limitations of tokenized credit investments.

Unlike some crypto loans, most credit protocols require investors to lock up their capital for a set term, meaning it can’t be used for collateral or accessed until maturity. As lending in RWA grows, lenders will demand easy access to liquidity and be able to diversify their investment positions. Thus far, crypto investors have had no options to easily compose customized strategies in RWA. Investing in different credit protocols requires going through multiple KYC onboarding processes that take significant time, effort, and resources. All of these issues have been hurdles for the growth of RWA.

Active RWA loans have reached $530 million1 in volume to date and continue to grow despite the crypto bear market. Analysts from Coinbase and Coinmetrics both expect significant continued growth in the tokenization of RWAs. This trend is driven by increasing institutional adoption and the demand for transparency and compelling use cases in crypto. Creating a platform to streamline and make RWA composable accelerates the growth and adoption of this category in DeFi.

Platform benefits

Our mission is to accelerate the growth and adoption of RWA by addressing liquidity challenges and unlocking the utility of blockchain and crypto to real use cases.

Here’s how AlloyX benefits you as an investor:

• Flexibility and Composability: Take control of your investment strategies by tailoring them to match your liquidity needs, target returns and risk tolerance. Blend real-world linked assets, including US Treasuries, with ease to maximize investment potential.
• Enhanced Liquidity: Gain access to liquidity and withdraw a portion of capital before the loan matures if necessary. Enjoy the flexibility to manage capital according to investors’ changing financial needs.
• Diversification: Build diversified investment strategies by pooling funds from various credit and US treasury protocols. By spreading investments across multiple pools and assets, investors can potentially reduce risks and maximize returns.
• Simplified Onboarding: Save time, effort and money with our streamlined onboarding process. Complete a single KYC process to gain access to multiple credit protocols, eliminating the hassle of repetitive procedures.
• Automatic Reinvestment and Lower Cash Drag: AlloyX simplifies the investment journey by automatically reinvesting funds at each payment period. This keeps investor capital continuously working for returns, minimizing idle cash and maximizing earning potential.

Product Roadmap

With the pre-seed round funding, the team has integrated with nine credit protocols. The blended vault with Credix Finance and U.S. T-bills will be live in early Q3 2023 and available to non-U.S. investors. The product roadmap will continue to focus on integrating with additional DeFi protocols and setting up a DAO. AlloyX has reached $5 million in total value locked (TVL) and generated yields above 18% on average since inception.