Cross-chain decentralized finance (DeFi) protocol Umee is stepping into TradFi.
Umee is creating an institutional lending decentralized autonomous organization (DAO) called UDX to help facilitate the transition of bond markets into DeFi lending. The initiative will improve bond markets’ efficiency on Umee’s Cosmos-, Ethereum-, Avalanche-, Near- and Solana-compatible trading platform.
Umee CEO and co-founder Brent Xu said that the DeFi space doesn’t yet offer a yield curve equivalent to the one that exists in traditional financial markets. To onboard the traditional finance sector into DeFi, UDX’s yield curve will help create asset specific interest rate structures.
Umee has been expanding its DeFi hub by acquiring almost $40 million in funds over the past 15 months. In June 2021, it raised $6.3 million in seed funding to begin building out its Cosmos and Ethereum bridge protocol. In December, it raised $32 million in a token sale before its mainnet launched in February.
Xu said its DAO structure will distribute funds through its native Cosmos SDK governance that creates loans though specific chains.
“The chain will act as a public ledger of the health of the loan in the same way that quarterly statements show the financial health of the company,” said Xu. “This provides a way to optimize the monitoring and viability of the financial health of the loan itself."