MYSO closes $2.4M Seed Round
MYSO Finance closes their Seed Round, successfully raising $2.4M to build the leading DeFi protocol for Zero-Liquidation Loans
We’re thrilled to announce that MYSO Finance has raised $2.4M in its seed round. Our team will be deploying this capital to accelerate the development of MYSO’s zero-liquidation loan protocol, called “IKARUS”. The IKARUS protocol allows users to borrow without liquidation risk while offering Liquidity Providers (LPs) yield for bearing this risk.
We are proud to be backed by several seasoned crypto VCs, strategic investors, and angels, including Huobi, Nexo, Wintermute, GSR, Hashkey, CMT Digital, Nothing Research, Caballeros Capital, Advanced Blockchain, Ratio Ventures, Symbolic Capital Partners, Jabre Cap and Mentha Partners.
The Problem: Liquidations in DeFi Borrowing Protocols
Current DeFi borrowing and lending protocols take a liquidation-centered design approach, meaning they trigger liquidations as soon as a target Loan-to-Value (LTV) is breached. This design approach comes with several drawbacks: first, users that get liquidated must pay a liquidation penalty (users have paid over $60M in liquidation penalties so far). Secondly, it creates operational overhead for borrowers, requiring them to constantly monitor their health factors and LTV levels. And worst case, borrowers may find themselves unable to prevent being liquidated as repaying or topping-up a loan can be heavily delayed in times of market turmoil and congested networks. Thirdly, external prices are needed from oracles to orchestrate liquidations. However, such external prices are prone to manipulation and might not even be available on some blockchains and for some cryptocurrencies, such that borrowing facilities cannot be offered in these cases.
To address these shortcomings, MYSO Finance adopts a rather different and innovative protocol design approach to permissionless lending and borrowing. Users borrowing with the IKARUS protocol can transfer the liquidation risk to LPs, who in exchange can earn a risk premium for bearing this risk.
What is IKARUS
The IKARUS protocol is structured like a DEX, meaning that for every crypto currency pair an individual borrowing market and liquidity pool can be created. LPs can fund each market by providing both assets of the associated pair, while borrowers can borrow one asset after posting the other as collateral, and vice versa.
A unique characteristic of the IKARUS borrowing protocol is that it is oracle-independent, meaning repayment and settlement of loans happens by virtue of incentives rather than requiring external price information to orchestrate this process. Naturally, it is in the users’ own interest to repay their loans if the value of their pledged collateral remains above the amount owed. If this is the case and they repay, then LPs receive an interest payment, and otherwise, if users don’t repay, LPs receive the pledged collateral. While LPs bear the downside risk of the given collateral, they receive a risk premium for this, which is automatically determined based on the supply and demand dynamics of the given borrowing market. The resulting risk profile of LPs is comparable to that of an option writing strategy of holding covered calls and covered puts.
In contrast to conventional crypto-loans, users of zero-liquidation loans never get liquidated, even in case of flashcrashs, all while ensuring that they can reclaim their pledged collateral any time prior to expiry of their loan. Note that the MYSO protocol can also be used by DAOs, who want to offer borrowing facilities for their native token independently of oracles (please reach out to dao@myso.finance in case you’re interested).
About MYSO Finance
MYSO Finance was founded in early 2022, after being awarded as one of the winners at the ETHOnline hackathon in October 2021. MYSO Finance is an abbreviation for a Million Yield Structuring Opportunities and aims to combine concepts from the world of DeFi with TradFi to build game-changing financial products, starting with the IKARUS protocol as its first product.
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