Level Raises New Funding to Boost $80 Million Yield-Paying Stablecoin

Stablecoin protocol Level has raised a new round of venture capital funding to expand its yield-paying stablecoin, lvlUSD, in response to a growing demand for yield-generating digital assets amid a slowdown in crypto prices.

Recent Funding Round

Peregrine Exploration, the development firm behind Level, secured $2.6 million led by Dragonfly Capital, with participation from Polychain. In an interview with CoinDesk, founders David Lee and Kedian Sun revealed new investors include Flowdesk, Echo Syndicates, Native Crypto, Feisty Collective by Path, and angel investors Sam Kazemian of Frax and Albert Chon of Injective.

This funding round comes after a previous $3.4 million raise in August, bringing total funding to $6 million to date.

Competing in the Stablecoin Market

Level’s lvlUSD token is positioned in the rapidly growing stablecoin sector, a key area attracting venture capital. Stablecoins are cryptocurrencies pegged to a stable asset, such as the U.S. dollar, and are essential for blockchain trading and transactions. However, many leading issuers do not offer yield on backing reserves. For instance, Tether reported $13 billion in profits last year, partially from yields on its $143 billion USDT token.

This has led to a rising interest in yield-earning stablecoins among crypto investors. For example, Ethena’s USDe generated over $5 billion in supply within a year. Tokenized money market funds and Treasury bill alternatives also garnered a $4.6 billion market cap.

Yield Generation with lvlUSD

Investors in Level can earn yield by utilizing backing assets on decentralized finance (DeFi) lending protocols like Aave. Users can mint lvlUSD by depositing USDC or USDT and stake their tokens to generate on-chain yield. Currently, the annualized yield for staked lvlUSD is 8.3%, exceeding money market fund yields. The stablecoin integrates with DeFi protocols like Pendle, Spectra, and LayerZero and can serve as collateral on Morpho.

Sven Wellmann from Polychain emphasized that Level’s fully on-chain and transparent yield generation sets it apart from competitors employing opaque methods.

Level asserts that it has surpassed rival stablecoin yields over the past month, contributing to its supply growth to over $80 million in just five months post-launch.

Future Plans

With the new funding, Level aims to enhance its team and marketing strategies while expanding the utility of lvlUSD beyond staking. The protocol also plans to leverage Morpho for yield generation in the upcoming weeks. Kedian Sun expressed a goal of achieving a market cap between $200 million and $250 million.