Fabric Ventures is joining Andreessen Horowitz in backing the team behind Angle Labs in a $5m seed round alongside Wintermute, Divergence Capital, Global Founders Capital, Alven, Julien Bouteloup and Frédéric Montagnon.
Extreme volatility was amongst one of the fiercest criticisms leveled by the mainstream at digital assets until a few years ago. We are now swimming in solutions from which to choose: USDC, DAI, USDT, TUSD, BUSD, UST, USDP … the list goes on. Stablecoins have been the lifeblood of DeFi over the past years with $130b in market capitalisation and $76b in 24h trading volume.
However us Europeans face one problem: the entire industry has been denominated in USD pegged stablecoins. The market for EUR stablecoins comes in at a mere $250m in value and $15m in 24h trading volume — approximately 0.002% of the USD stablecoin market value. In a world dominated by severe geo-political tensions leading to large FX movements, Europeans would have had to make over 10% yield in 2020 on their stable USD to barely break-even in EUR terms as there has not been a credible & scalable EUR stablecoin alternative available to them or the EUR focused DeFi applications that would surround them.
Angle Labs is gearing up to launch the first reliable and liquid stable Euro (agEUR) on Ethereum, which will be followed by other currencies including USD, CHF, GBP, JPY and KRW. Angle is an over-collateralised, decentralised and capital-efficient stablecoin protocol that proposes full bi-directional convertibility between stable assets and collateral — one of the key missing elements of existing decentralised stablecoin protocols (MakerDAO cannot retroactively implement redeemability of DAI as individual Vaults are private but DAI is a general expression of debt against the entire protocol).
In order to keep deep liquidity while offering 1 to 1 conversions between stable assets and collateral for users, Angle splits the economic actors of the protocol into three major roles: stability seekers, liquidity providers and leverage seekers.
Stability Seekers (agEUR holders)
- Mint and burn stable assets with or against collateral at a 1:1 rate
- Have profitable arbitrage opportunities when price deviates from peg
- Hedged and over-collateralised
Standard Liquidity Providers
- Providing liquidity used to over-collateralise the protocol
- Act as a buffer to mitigate price drops
- Benefit from transaction fees and yields.
Leverage Seekers (Hedging Agents)
- Opening long-term leveraged positions without funding fees (up to 100x)
- Insuring protocol against price variation of the collateral from users
- Incentivised with governance tokens and funding free leverage
By breaking out the users of the protocol into distinct responsibilities that fit the specific desires of three different types of economic actors, Angle is able to achieve much more granular and efficient funding of the protocol than other stablecoin protocols while guaranteeing full convertibility of assets. Angle is structured to mint the stablecoins directly to the stability seekers rather than the leverage takers who then sell the stablecoins into the market to stability seekers for more leverage.
We were lucky to meet the team of Pablo Veyrat, Guillaume Nervo and ‘Picodes’ (pseudonymous co-founder) early in their journey thanks to an introduction from Bartosz Jakubowski at Alven and the work of our Research Partner Tom Walton-Pocock in the field of more capital efficient stablecoin protocols.
Fabric is thrilled to back this incredible team with a $5m seed round in Angle Labs and join their journey alongside Ali Yahya at Andreessen Horowitz, with participation from Wintermute, Divergence Capital, Global Founders Capital, Alven, Julien Bouteloup and Frédéric Montagnon.
Angle Labs is expecting to launch the Angle Protocol in late October/early November with a stable Euro. The protocol has been audited by Chainsecurity and Sigma Prime, and is currently live on testnet.
Finally, something more than a token gesture of stable genius …and our Fabric farms say “Farewell USDC, Hello agEUR”.
Angle Labs: $5m Seed Round for Capital Efficient Stability was originally published in Fabric Ventures on Medium, where people are continuing the conversation by highlighting and responding to this story.