The non-fungible token (NFT) boom that started early last year continues without any sign of slowing down. NFTs have become one of the undisputed success stories of the last year. From relatively meager sales under $100 million in 2020, NFT transactions skyrocketed to hit $25 billion in 2021. NFT currently provides a perfect synergy between art and finance.
However, as big as we think the current NFT market size is, many analysts are estimating that a new type of NFT use case is going to cause the current NFT market to explode. And that market is Financial NFTs–An emerging NFT market that includes everything from insurance, bonds, to unique baskets of tokens, that have the potential to tokenize real-world assets.
Not surprisingly, investors are paying close attention and spending millions on the next big winners. And that’s why premier Silicon Valley VC firm AKA Angel is investing in Pledge Finance, a lending marketplace for Financial NFTs and the first marketplace for bitcoin loans
Today, Pledge announce it has received new investment from US-based investor Gianfranco Filice, through his angel fund AKA Angel. The total amount of the investment was not disclosed. The announcement comes just a few months after Pledge raised more than $3 million in funding.
Pledge said the new capital infusion will help the company to expand its marketing and increase liquidity, ultimately bringing more potential borrowers and traders to the platform. As a venture partner at OVO Fund focusing exclusively on Web3 investments, Filice’s investment signals confidence in strong returns when investing in longer-term loan products for the crypto ecosystem.
Founded in 2021 by Stanford Alumni and CEO Tony Chan, Pledge allows crypto holders and investors to take a fixed-rate loan from the Pledge ecosystem without selling their crypto portfolio to invest in other non-crypto asset classes. Tony is a serial entrepreneur and angel investor with a background in computer science holding a degree in the subject from Stanford University.
On its website, Pledge said its goal is to build foundational technology and create building blocks for the next generation of decentralized and open finance. Starting with the fixed-rate and terms bitcoin loan, Pledge said its V1 product offers TradeFi and DeFi investors a fixed return, and in parallel, fixed cost of capital to professional crypto traders. Pledge V2 will make bitcoin loans tradable by converting bitcoin loans into Financial NFTs.
You may be wondering how what Pledge is doing is different from the traditional decentralized finance (DeFi) projects. We think the same, too. But here is how Pledge explains it:
“Unlike other DeFi projects, Pledge is designed to allow the creation of innovative structured and collateralized lending products. These include fixed interest rate swaps, refinancing, and financial derivatives around credit markets in order to allow investors to build diversified portfolios tailored to whatever level of risk exposure they are comfortable with. These kinds of markets do around $500 trillion in trade volume every year.”
Pledge continued, “Innovations in fixed yield vaults, variable yield vaults, tokenization of yields, and seniority of bonds – represented in Pledge using financial NFTs – gives Pledge a unique position as a “Lego building blocks” maker, improvising capital efficiency and reducing liquidity friction.”
“Pledge’s most significant point of differentiation is to allow long-term holders of crypto to continue to share in an asset’s upside potential, while also recognizing that the desire to diversify into real assets may require liquidity at a time that is not opportune for investors,” said Filice. “If modern portfolio theory is any indication of a sound investment strategy, the ability to maintain one’s crypto positions while also diversifying into other financial instruments such as equities, fixed income, real estate, ad infinitum will only create a more robust ecosystem for Web3 as a whole.”
Excited about the investment, Tony Y. Chan, CEO of Pledge, said, “Together with Gianfranco’s expertise, value add, and network, Pledge will allow crypto investors to take loans and diversify their crypto portfolio into other asset classes. The client does not have to sell their bitcoin to diversify into other investment products or strategies recommended by financial advisors and others. Pledge delivers a legitimate end-to-end solution for crypto-rich cash-poor clients.”
Gianfranco Filice is a Venture Partner with OVO Fund, a premier pre-seed institutional VC firm in Menlo Park. His background includes stints at Goldman Sachs, McKinsey, Barclays, and Matrix Partners. OVO’s portfolio consists of Addepar, SignifyID, Monthly, Everlaw, and KiwiCrate.