Author: KarenZ, Foresight News
After the turmoil caused by the collapse of industry giants like Genesis, BlockFi, and Celsius in the crypto lending sector, an undisputed fact has gradually emerged: ensuring user security through self-custody while providing efficient and convenient lending services has become the core issue for the industry's development. Today, we will introduce a financial application that supports Bitcoin lending, Lava.
At the end of 2024, Lava completed a $10 million Series A funding round, led by Founders Fund and Khosla Ventures. Founders Fund has been quite active in the Crypto field, investing in projects like Polymarket, the modular blockchain project Avail, Igloo (the parent company of Pudgy Penguins), the Rollup-as-a-Service platform Caldera, the Bitcoin Rollup project Citrea, Solana infrastructure provider Helius, and the open-source AI platform Sentient, among other hot projects this year.
Khosla Ventures, the private venture capital firm founded by billionaire venture capitalist Vinod Khosla, has gained a reputation for its early investments in companies like Impossible Foods, Instacart, Affirm, DoorDash, Square, and OpenAI. Although Khosla Ventures has largely stayed away from the crypto space since its investment in Sam Altman's Worldcoin project in 2022, its investment in Lava once again demonstrates its strong confidence in the company.
What is Lava?
Lava, a Bitcoin financial application with the slogan "Save in Bitcoin, Spend in Dollars," is dedicated to building an application that enables Bitcoin savings and Dollar spending.
The founder of Lava is Shehzan Maredia, who serves as both the CEO and CTO. Most of the introductory articles on the Lava website are also written by Shehzan Maredia himself. Lava's team is divided into two core groups: the Vault team and the Application team. The former focuses on building self-custodial applications for Bitcoin and Dollars, while the latter is dedicated to developing various functionalities to support the self-custodial applications.
Lava Vault, Lava's flagship product, is designed for users who want to save in Bitcoin and spend in Dollars, such as Bitcoin holders, miners, traders, Bitcoin enthusiasts, immigrants, and users in developing countries.
Lava Vault is available on both iOS and Android and offers three main features: Lava Free Pay, Lava Exchange, and Lava Smart Key.
Lava Free Pay provides instant, free, and global payment services, allowing users to make payments on the blockchain without the need to hold Gas tokens, significantly enhancing the experience for self-custodial users. Lava currently supports USDC on the Solana blockchain and plans to integrate with other chains in the future.
Lava Exchange provides users with a convenient channel for buying and withdrawing Bitcoin. It not only allows users to directly purchase assets to their self-custodial accounts but also supports withdrawing funds to bank accounts. Essentially, Lava Exchange is a centralized exchange aggregator that can navigate users to the optimal price path. In the future, it will also integrate with more centralized exchanges and cross into decentralized exchanges to provide a unified exchange aggregator service.
After purchasing or depositing Bitcoin, users can use the Lava lending protocol to collateralize their Bitcoin and borrow Dollars, with interest rates as low as 4%. Users can choose to repay the loan with their appreciated Bitcoin (provided that the Bitcoin price has increased) upon loan maturity, or they can adjust the loan amount to suit their needs before the loan matures.
Users can then transfer the borrowed Dollars directly from their Lava Vault to their bank accounts. In the future, the Lava Card will also support users to spend Dollars directly from their Lava Vault.
Lava Smart Key is the key to Lava's secure self-custody solution. It does not require the use of a seed phrase but instead supports a 2-of-2 backup mechanism. One half of the backup is associated with the Seed and encrypted, stored in iCloud or Google Drive; the other half is tied to an encrypted private key stored on a private key server, which can only be authenticated using a 4-digit Lava recovery PIN defined by the user. This backup mechanism not only significantly ensures the security of the funds but also provides a convenient asset recovery path.
For enterprises, Lava provides the opportunity to earn digital Dollars through Bitcoin-collateralized loans. For developers, Lava supports the integration of its various features, such as Lava Free Pay, Lava Loans Protocol, Lava Exchange, and Lava Smart Key.
It is worth noting that, unlike many other crypto startups, Lava does not plan to launch its own token, and its Series A funding round was conducted through an all-equity financing method.
