Round led by Initialized Capital, with continued participation from ConsenSys and new investors including Morgan Creek Digital.
We're excited to announce that Atomic Loans has raised a $2.45M seed round, led by Initialized Capital. Additionally, we’re extremely grateful for the continued support from the ConsenSys Labs team and also welcome new investors: Morgan Creek Digital, Joe Lallouz and Aaron Henshaw of Bison Trails, Russell Verbeeten, Mike Cohen of The Abelian Group, and Regan Bozman. A warm welcome to all of our new world-class investors, and we couldn’t be more excited to have them join the Atomic Loans family!
This is an important milestone for our team. Bitcoin is an asset built for the decentralized financial system and the Atomic Loans team is focused on bringing decentralized finance to Bitcoin. Our mission is to build decentralized financial infrastructure that uses Bitcoin as it was intended. Initially, this begins with vastly improving the transparency and security of Bitcoin-backed lending markets.
"There’s a new alternate financial system being built around Bitcoin, with a focus on decentralization. Atomic Loans is building the decentralized financial infrastructure that uses Bitcoin how it was intended." (Anthony Pompliano, Partner at Morgan Creek Digital)
Before we go further, we wanted to share our story of how we got here, our fundraising journey, and where we’re going over the next few months!
What is Atomic Loans?
The Atomic Loans protocol enables a two-sided marketplace for Bitcoin-backed lending. It allows users to lock their BTC natively in a non-custodial escrow on the Bitcoin chain, and borrow an Ethereum stablecoin such as DAI or USDC. This allows users to leverage their Bitcoin to trade or pay for expenses without creating a taxable event or losing exposure to Bitcoin price upside. Using Atomic Loans, the process of taking out a Bitcoin backed loan requires just one on-chain Bitcoin transaction to lock collateral, and one Ethereum transaction to withdraw the loan.
Our journey so far
We first began working on the idea around Atomic Loans just over a year ago. At that point, the concept of crypto-backed loans was gaining momentum, and Decentralized Finance (DeFi) on Ethereum, while still early, started showing promise.
But for Matthew and myself, we were Bitcoiners at heart. In our view, Bitcoin is a phenomenal asset for collateral in a loan. It is highly liquid but scarce, secured by the largest network of computing power in the world, and widely recognized as a fantastic store of value. However, due to its primitive scripting language, Bitcoin can be rather difficult to work with and build products on top of. This is especially true when trying to build something as complex as a non-custodial DeFi product. Unsurprisingly, nearly all lending activities and financial tools with Bitcoin involve centralized gatekeepers.
That being said, having had experience working with Bitcoin scripting, as well as being intimately familiar with how cross-chain protocols can work on atomic swaps, we felt that we might just have the technical know-how to work on such a project. Combine this with the immense growth of stablecoins on Ethereum, and we saw huge potential for a cross-chain lending protocol that would leverage the security of the native Bitcoin blockchain along with the stablecoin liquidity on Ethereum.
Fast forward 14 months, after several audits, lots of testnet deployments, bring onboard our first hire (our beloved VP Eng - Steven Zhao), and numerous iterations later, we’re happy to be bringing the Atomic Loans protocol to the forefront and share this exciting news with you today!
Our seed round
When we set out on our fundraising journey, we knew we really wanted a partner who have had a track record of helping companies succeed in their earliest stages and reach product market fit.
Initialized’s experience building and backing highly successful companies early on, both inside the crypto space (Coinbase) and outside (Instacart, Reddit), meant they were top of mind when we set out to fundraise.
We’re absolutely stoked to have Brett Gibson and the Initialized team onboard as our lead investor! Their guidance and expertise will be crucial in helping us build Atomic Loans in the months and years ahead.
“As remarkable as the growth of DeFi has been to date, little or none of it works natively on Bitcoin. This leaves out what is far and away the largest and most valuable crypto-asset. Atomic Loans is leveraging their deep expertise in Bitcoin scripting and atomic swaps to create a useful DeFi product that works on the Bitcoin blockchain directly without requiring complex synthetics on other blockchains.” (Brett Gibson, Partner at Initialized Capital)
Prior to starting up Atomic Loans, Matthew and myself were working at ConsenSys in the fall of 2018 — on the Liquality and OpenLaw teams respectively. We were were extremely fortunate to have them invest in our pre-seed round at the beginning of 2019.
Being our very first investors, Min Teo and the ConsenSys Labs team has been instrumental in our early success — tirelessly making introductions to investors, as well as potential partners and customers. Their incredible network and reach within the Ethereum ecosystem has been and will continue to be a tremendous asset to Atomic Loans moving forward.
“Bitcoin will be a core component of DeFi activity, which is growing and expanding rapidly in Ethereum today. The vision of creating a parallel financial system that is permissionless and open to all is one that transcends across chains and communities, and we are proud to continue our support for Atomic Loans who are at the forefront of realizing this vision in a trust-minimized manner." (Min Teo, Partner at ConsenSys Labs)
Morgan Creek Digital
There are few as instrumental as Pomp and the Morgan Creek team has in growing crypto adoption. So during our fundraising process last fall, when we caught wind of the November 4th edition of Pomp’s “Off the Chain” newsletter titled “Will DeFi Come To Bitcoin’s ecosystem?”, we were understandably excited.
This was an excerpt from that newsletter:
We’re thrilled to be joined by investors like them who are just as excited as us to see the infrastructure for bringing DeFi to sound money come to fruition!
What’s next on the radar?
When we started on Atomic Loans, we knew that the path to bringing DeFi to Bitcoin wouldn’t be easy. As Pomp stated in his article, there are really two ways to make this happen:
(1) create a way for Bitcoin to become usable in the Ethereum ecosystem or (2) create decentralized financial services infrastructure around Bitcoin
By taking the second path and choosing to build decentralized financial infrastructure that is native to Bitcoin, we’ve chosen the path less travelled.
That being said, despite being more technically challenging, the advantages of this Bitcoin-native approach are limitless. You have access to the liquidity of the entire Bitcoin network while retaining the security of the largest proof-of-work chain in existence. You also have very limited smart contract risk for the Bitcoin locked up as collateral.
Over the next 12-18 months, our plan includes the following:
- Continue to iterate the protocol in order to allow for more flexible lending options for our borrowers.
- Work with strategic partners to grow adoption of non-custodial Bitcoin finance.
- Continue to improve the accessibility of the protocol to users by improving the user interface.
- Ensure we develop a regulation-compliant approach towards building non-custodial Bitcoin financial products.
- Grow the team by hiring world-class engineers, designers, and business experts to help take us to the next level.
How do I get access?
Today, in addition to the fundraise, we’re also announcing that the borrowing side of the protocol is now available for everyone to access. Simply go to https://atomic.loans/app, click “Borrow”, and get started on a non-custodial Bitcoin-backed loan today!
If you’re excited about what we’re building at Atomic Loans and are interested in joining the team, please reach out to me directly.