Elevation Capital Leads $3 Mn Round In DeFi Startup Pillow

Singapore and Bengaluru-based Pillow, a Decentralised Finance (DeFi) startup, has raised $3 Mn in a seed round led by Elevation Capital. The round also saw the participation of prominent crypto angels such as DeFI Pulse’s Scott Lewis, Polygon’s JD Kanani and Sandeep Nailwal FalconX’s Prabhakar Reddy and Biconomy’s Aniket Jindal, among others.

The blockchain startup plans to use the funds to build alpha-generating DeFi strategies for popular crypto-assets (including $BTC, $ETH and stablecoins) and accelerate global expansion.

Founded in 2021 by Arindam Roy, Rajath KM, and Kartik Mishra, Pillow helps crypto owners generate yields on their idle assets. It is a community for users worldwide who want to earn interest on their crypto, instead of letting them lie idle — i.e. simply put it acts as a savings bank account for crypto owners.

The process is simple — users need to login into their crypto exchange platform (for instance WazirX), and instead of withdrawing their assets converted in fiat currency, they need to enter the wallet code of their Pillow account.

Pillow’s platform helps generate downside-protected interest as high as 18%, on crypto-assets by investing in curated and actively managed DeFi strategies. For users, it takes away the complexity of DeFi, as users can invest and earn high yields without worrying about gas (transaction) fees, underlying chains and tokens, etc. They only need to connect their crypto wallet to the DeFi platform.

Within three weeks of its beta launch in December 2021, Pillow has scaled to more than $1 Mn in AUM (Assets Under Management) on the back of its stable coin strategy — which provides a 17.8% yield. Pillow keeps a small percentage of the spread generated, a small percentage also goes into Pillow’s yield reserves, and the vast majority of the returns are passed on to the user.

To ensure customers’ crypto-assets are secure, Pillow uses custodial service BigGo, for custody management and leverages Gnosis Safe for multi-sig capabilities. This way, the startup also insures funds of up to $100 Mn on any problems arising because of custody.

The DeFi Definition & The Blockchain Opportunity

DeFi or Decentralised Finance is essentially a blockchain-based form of finance without the involvement of central financial intermediaries, such as banks, brokerages or exchanges — an open setting. A DeFi Hub allows users to view and manage decentralised assets across major blockchain networks. It uses smart contracts to record transactions and transfer funds without duplicating them.

According to the DeFi startup Pillow, while DeFi is in a nascent stage, it is fast growing. The Total Value Locked (TVL) has grown to $250 Bn in January 2022, up by 12.5X from $20 Bn in January 2021.

Indians are now fast moving towards DeFi platforms. In fact, the majority of crypto transactions are now occurring on DeFi platforms, says the 2021 Geography of Cryptocurrency Report by blockchain data firm Chainalysis.

Besides the Global Crypto Adoption Index where India ranks two, Chainalysis has also introduced the Global DeFi Adoption Index. India has been ranked sixth in this index, closely behind China and the UK.