Decentralized finance protocol iZUMI Finance has raised $30 million through the sale of bond vouchers and claims on its iZUMi Bond USD (iUSD), the company said Friday.
Singapore-based iZUMi Finance provides liquidity services, which is the conversion of an asset into cash or another asset. The protocol is used on the Ethereum, BNB Chain, Polygon and Arbitrum blockchains and has a total value of about $58 million, according to DefiLlama data.
Along with the funding, iZUMi announced its new decentralized exchange, iZiSwap (DEX), which uses a novel automated market maker (AMM) protocol and the iUSD token.
"Liquidity is the catalyst for DeFi's growth. With the launch of our Discretized-Liquidity AMM and iUSD, iZUMi Finance removes barriers to liquidity and makes DeFi more attractive and efficient for market participants," iZUMi co-founder Jimmy Yin said in a press statement.
Funding
The iUSD token is pegged to the USD at a 1:1 ratio, similar to a stablecoin, and backed by iZUMi's collateral and future revenues. IZUMi issues and sells iUSD to private investors.
The new funding included $20 million from institutional investors such as IV Ventures, Cobo, and Mirana. More than half of this amount came from the sale of vouchers through the bond-focused Solv protocol. iZUMi also sold BUSD 4 million worth of vouchers and another 5,000 in BNB, which is equivalent to about $2 million.
Decentralized exchange
The new iZiSwap exchange is based on what is called a Discretized-Liquidity AMM. An AMM is simply the protocol that runs a DEX. The discretized liquidity part is a bit more complicated.
The DLAMM model optimizes price spreads and the amount of liquidity for providers. The end result is a lack of slippage, i.e., a difference between the expected price and the executed price in a transaction.
"Let's say you go to a bank and transfer your USD into CNY. You can't always get the exact equivalent in CNY because there are transaction fees from the bank and fluctuating exchange rates," Yin told CoinDesk via Telegram. "DeFi solves the transaction fee part by lowering it significantly compared to banks, and we take care of the part where the exchange rate is as favorable as possible for you.
"Exchange rates fluctuate from time to time because there are makers and takers who have to agree on a price to make the trade happen. These parties are liquidity providers for the USD/CNY trading pair, and DLAMM optimizes the price spreads and liquidity depths for them," he continued.