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Stablecoin protocol Level raised a fresh round of venture capital to grow its $80 million yield-paying stablecoin. This boost is because people are looking for more digital assets that pay returns as crypto prices drop.
The company that built Level, Peregrine Exploration, got an extra $2.6 million, led by early backer Dragonfly Capital. Polychain also joined the round but did not lead it, founders David Lee and Kedian Sun told a reputable news outlet in an interview. Flowdesk, Native Crypto, and Feisty Collective by Path, as well as angel investors Sam Kazemian of Frax and Albert Chon of Injective, have all become new investors.
Level’s New Funding Round Attracts More Investors
Until now, the total venture capital funding has reached $6 million, and this round came after raising $3.4 million in August.
When it comes to its LvlUSD token, Level is competing in the stablecoin asset class, which is one of the hottest areas of crypto and a favorite of venture capitalists.
Stablecoins are cryptocurrencies that have a fixed value, mostly linked to the U.S. dollar. They play an important role in blockchain trading and transactions. On the other hand, the largest issuers do not generally provide users with yield earned on assets in the backing reserve. For example, last year, Tether, for instance, recorded $13 billion in earnings, mostly from the U.S. Treasury yield supporting its $143 billion USDT token.
That’s why crypto investors are becoming more and more interested in a new generation of stablecoins that earn interest. In a little more than a year, Ethena’s USDe supply grew to more than $5 billion. It earns money through a market-neutral carry trade strategy that takes advantage of future funding rates. Tokenized versions of money market funds and Treasury bills, which are another alternative to stablecoins, reached a market value of $4.6 billion.
Level’s stablecoin gives investors a return by using the assets that back it on decentralized finance (DeFi) lending protocols like Aave, and it also manages its reserves automatically. By depositing Circle’s USDC or USDT stablecoins, users can mint lvlUSD. They can then lock up (stake) the tokens and lend them out to make money on the chain. If you staked lvlUSD last week, you earned an annualized yield of 8.3%, which was higher than the yields on tokenized money market funds. Furthermore, lvlUSD can be used as collateral on Morpho and has been added to DeFi protocols like Pendle, Spectra, and LayerZero.
LvlUSD Offers Higher Returns Than Other Stablecoins
Sven Wellmann of Polychain, one of the investors in the protocol, stated, “Their fully on-chain, transparent approach to yield generation sets them apart from competitors depending on opaque, centralized methods.”
According to Level’s analysis, its supply has grown to more than $80 million in just five months after the beta release. This is because, in just one month, the protocol’s yields were higher than other stablecoins.
With the new funding, Level plans to grow their team and marketing efforts, and they will also keep adding more ways to use lvlUSD apart from staking, as Kedian Sun explained. The protocol also plans to use Morpho to earn yield in the coming weeks.
Sun said that if those things are done, lvlUSD might be able to reach a $200-$250 million market cap, which is a major goal for the team.
