Goldfinch
Goldfinch is a decentralized credit protocol allowing crypto borrowing with loans fully collateralized off-chain, instead of with crypto assets.
Website: https://goldfinch.finance/
HQ: San Francisco, California, United States
Active Markets: Global
Problem Addressed
Many DeFi projects require overcollateralization of crypto loans with crypto assets. Individuals have to put up more collateral than the loan they receive, and must do so with crypto assets which they are less likely to have, preventing the majority of borrowers from accessing DeFi products.
Project Description
Goldfinch creates credit lines for lending businesses with off-chain capital. Goldfinch community investors supply capital to these businesses directly or indirectly. Borrower businesses use their credit lines to draw down USDC stablecoins and exchange those assets for fiat currency. Once off-ramped, borrower businesses deploy capital to end-borrowers in their respective local markets.
Goldfinch is seeking to create a global credit marketplace, employing a “trust through consensus” mechanism approach which allows lenders to evaluate the creditworthiness of potential borrowers directly - removing the need for on-chain collateral and leveraging the liquidity and efficiency of blockchain rails.
Business Data
Status: Active
Constituency Served: Underbanked
Networks: Ethereum, Circle
Known Investors: a16z, Coinbase, SVA, Orange DAO, Kindred Ventures, Kingsway Capital, Y Combinator Continuity Fund, Mercy Corps Ventures, IDEO CoLab Ventures, Access Ventures, MSA Novo, BlockTower Capital, Divergence Ventures, Variant
Additional References: N/a
Progress to date
After a December 2020 launch, Goldfinch announced a pilot in early 2021 supporting Payjoy's lending operations in Mexico. Goldfinch’s $1 million funding round for the pilot provided capital for Payjoy to finance the purchase of mobile phones for their customers, being repaid monthly by these customers with interest. Goldfinch raised $37.7 million as of their latest funding round in January 2022.
By the fall of 2022, the company had expanded its offerings through a tokenomics redesign to include Membership Vaults, or enhanced yield generation for Goldfinch community investors holding the protocol’s native GFI token. In April 2023, Goldfinch completed a USDC 1.35 million callable loan to a Singapore-based company.
Business Model
Goldfinch earns 10% of all interest on borrow pool loans and facilitates a 0.5% withdrawal fee from their top tier lending pool.
Traction
As of January 2024, Goldfinch estimates they have reached over 4 million businesses and individual borrowers. Goldfinch’s market is the largest in the United States with $20 million in active loans deployed, followed by Mexico at $13.5 million and Kenya at $11.2 million.