Goldfinch raises $11M from Andreessen Horowitz to build the next phase of decentralized credit

Today we’re excited to announce we have raised $11M in funding, led by Andreessen Horowitz (a16z crypto). From the beginning, we’ve been focused on the crucial missing piece in DeFi of loans without collateral. The vast majority of borrowers in the world can’t actually borrow on DeFi today because it requires overcollateralization with crypto. By removing that collateral requirement, though, the Goldfinch protocol can unlock an entirely new level of borrowing capacity. This is what will finally allow crypto to break out into global debt markets.

We are also announcing our Backer Program. This is an incentivized program we will pilot over the coming months, and it’s the first way for the community to start participating directly in the protocol. Even beyond Goldfinch, it’s the first time DeFi users will be able to provide crypto loans directly to emerging market borrowers. You can sign up here to be one of the first to participate and learn more as we roll out the program.

Finally, we can now point to the Goldfinch whitepaper that forms the basis for the protocol. Undercollateralized loans remain one of the biggest open challenges in crypto today, and this paper shows how the Goldfinch protocol solves it. The protocol uses a unique approach that centers around the principle of “trust through consensus” and has the ability to scale in a fully decentralized way. We encourage people who are passionate about this problem to join us on Discord and share your feedback.

We’re excited to partner with the a16z crypto team and a number of other backers who share in our vision. This gives us the resources we need to build on the protocol’s momentum. Since launching a few months ago, the protocol has grown 2.5X with loans extended to borrowers across 7 countries: India, Indonesia, Mexico, Nigeria, Singapore, Thailand, and Vietnam. Our mission is to build a decentralized credit protocol that expands financial inclusion, and this is just the first step. We’re now hiring to help the Goldfinch protocol grow to the next level — join us!

How the Goldfinch Protocol Works

Today we can also point to the Goldfinch whitepaper that forms the basis for the protocol. As we’ve shared in prior posts, our mission is to build a decentralized credit protocol that empowers financial inclusion. To get there, the core challenge is enabling crypto borrowing without requiring crypto overcollateralization.

The whitepaper presents an approach that achieves this in a fully decentralized way. The protocol does this by using the concept of “trust through consensus”: that borrowers can show creditworthiness based on the collective assessment of other participants, rather than based on their crypto assets.

The protocol can then use this collective assessment as a signal for automatically allocating capital. By removing the need for crypto collateral and providing a means for passive yield, the protocol dramatically expands both the potential borrowers who can access crypto and the potential capital providers who can gain exposure.

The protocol will launch in stages through a closed beta and then progressively decentralize. The first release enables Backer participation, and we just submitted it for audit last week. We will then iteratively release new components of the protocol design outlined in the whitepaper until it is fully decentralized. We encourage people who are passionate about this problem to join us on Discord and share your feedback.

Announcing the Backer Program

As described in the whitepaper, the protocol “Backers” are an integral participant, perhaps the most important. We will be launching an incentivized program for the community to participate as Backers in the first deals on the protocol.

Not only is this a major development for the protocol, but it’s also the first time that DeFi users will be able to provide crypto loans directly to emerging market borrowers.

We will share more details in the coming weeks, but in the meantime you can sign up here.

$11M Funding Led by a16z

To help us reach our mission, we have raised $11M led by a16z, along with a number of new investors including Mercy Corps Ventures, A Capital, SV Angel, Access Ventures, Divergence Ventures, Defi Alliance, Draft Ventures, Balaji Srinivasan, Wale Ayeni, Ryan Selkis, Jason Choi, Josh Hannah, Lisa Cuesta, Viktor Bunin, and others.

It’s an amazing group of people with a broad set of backgrounds — from builders in the crypto space, to veterans of tech startups, to experts in emerging markets.

This follows significant growth of the Goldfinch protocol. Since launching in January, the protocol has grown 2.5X and is now serving tens of thousands of end borrowers across 7 countries: India, Indonesia, Mexico, Nigeria, Singapore, Thailand, and Vietnam.

With these new resources, we are significantly growing the team. We have several new job openings — join us in bringing crypto loans to the real world!