Lisbon, Portugal, July 6, 2022, Chainwire
Altitude secured $2.1 million in funding from a number of prominent builders and angels in the Web3 ecosystem
Altitude (Altitude.fi), a decentralized finance (DeFi) protocol offering an actively managed collateralized loan, the first of its kind, which uses volatility in the value of collateral to repay itself over time, has closed a funding round of some number of prominent investors deeply involved in the Web3 space.
Investors include a number of leading angel investors in the web3 space:
Danes Chaudhry, Batuhan Dasgin, Benedikt Schulz, Dermot O’Riordan, Evgeny Gokhberg, Fabian Wetekamp, Georgi Georgiev, Kay Meyer, Lyuben Belov, Winslow Strong, Xin Wang and many more.
Loans in the decentralized finance (DeFi) space are usually collateralized and a common trend among crypto investors is to use their crypto holdings (i.e. bitcoin, ether, etc.) as collateral and borrow against them. This allows long-time believers in crypto to keep their investment portfolio intact while freeing up cash.
The main challenge of using crypto assets as collateral relates to the notorious volatility of the crypto markets. It is considered normal for bitcoin price to fluctuate up and down by a high percentage in a single day. If the price drops, the loan could become undersecured and eventually liquidated.
Given the constant volatility in the crypto markets, such liquidations are not uncommon, so borrowers should be very careful when choosing the amount of collateral for their loans. The trade-off is their capital efficiency, ie striking a balance between how much they can borrow relative to their holdings and the likelihood of liquidation.
The second challenge with borrowing in DeFi is that interest rates can fluctuate between lending platforms, which means a borrower may borrow on one lending platform only to find that the next day their rate is significantly higher than the other available rates.
This is where altitude comes in.
Altitude itself is not a lending platform, but a protocol that handles loans and collateral across major platforms in the DeFi space. When someone borrows through Altitude, the protocol actively manages both the loan and the collateral in real time based on market conditions to optimize the loan.
How it works?
Once someone borrows through Altitude, the protocol continuously scans major lending platforms for a lower interest rate and as soon as it detects one, the loan is automatically refinanced, ensuring that borrowers are always borrowing from the lowest rate available.
On the collateral side, the protocol monitors the value of collateral provided, and while the loan is over-collateralized, it automatically commits unused collateral to generate a return by deploying funds into relevant yield-providing platforms. If the value of the collateral decreases, the protocol automatically rebalances to maintain a healthy loan-to-value ratio and as the value of the collateral increases, the protocol deploys more funds to generate additional return.
The net effect for borrowers is that the yield generated by the protocol is used to reduce their loan, in effect automatically repaying the loan over time.
Because capital is managed like a vault, individual borrowers are never exposed to the full gas charges, making rebalancing between loan pools and yield platforms efficient, even for small borrowers .
It is only possible to do this in a fully automated way due to the composable and trustless nature of decentralized finance, where Altitude is able to move funds between protocols to achieve high degrees of capital efficiency via l ‘automating. The funding will be used to expand the Altitude team to continue developing the protocol.
Altitude offers you active management of your secured debt positions, so you can be free to focus on other more important things in your life. When you borrow through Altitude, your debt is funded through one of the major pools at no cost to you and therefore at no financial inconvenience to you when borrowing through the protocol.
More information on how the protocol works can be found here:
- Dan Edelman
- [email protected]