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Expanding DeFi – Our investment in Mycelium

Published on
April 13, 2022
Pat McNab
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We’re excited to be investing in Mycelium’s US$4.75m seed round alongside Framework Ventures and DACM. Mycelium is a programmable reputation and identity service for DeFi.

The DeFi environment currently has no reputation layer. Most users on the blockchain interact via an on-chain wallet (e.g., Metamask) that does not require any form of KYC or identification. 

Whilst DeFi continues to grow rapidly, with total value locked rising to $200b as of early 2022, we believe that the absence of an open reputation layer severely limits the offering of existing and potential DeFi solutions. 

Take lending as an example. Today, nearly all forms of DeFi loans are provided on an overcollateralised basis (e.g., deposit $200 of a principal token to borrow $100 of another token). To bring this to life with a traditional finance example: imaging having to deposit $20k liquid cash to gain access to a credit card with a $10k limit. That’s DeFi today.

Under-collateralised lending is not widely-available on DeFi today as it requires 1) credit scoring and 2) real-world consequences in order to function. Both are currently impossible without some form of individual reputation framework – the equivalent of a credit score in traditional finance.

Enter Mycelium. Mycelium aims to build an open, reputational framework for DeFi. And in doing so, unlock under-collateralised lending and help take DeFi mainstream. The team plans to achieve this vision by building a bridge that seamlessly integrates DeFi with existing identity systems & credit scoring data, whilst still retaining the crypto ethos of privacy and pseudonymity.

Meet the team

Mycelium is the latest project from this QLD-based crypto venture builder. Mycelium’s first project - Mycelium Node - was one of the first data nodes on the Chainlink network, helping secure the DeFi ecosystem with consistent, and accurate data feeds. 

The Mycelium team has leveraged that relationship to build a reputation framework for other data nodes on the Chainlink network, and plan to use that experience to inform their reputational framework for under-collateralised lending.

Pat, Ash, and the Mycelium team have built several globally relevant DeFi projects out of Australia. We’ve been blown away by our interactions with them and couldn’t be more excited to be supporting them on their journey. If you’re also keen to join - they are hiring across the board!

AirTree Ventures Pty Ltd holds AFSL No. 456766 and AirTree Ventures Custody Pty Ltd holds AFSL No. 544106.