According to CoinDesk, the crypto data startup Accountable has raised $2.3 million in seed funding aimed at transforming the under-collateralized crypto lending space. MitonC and Zee Prime Capital led the funding round, with angel investors Darius Rugys (from Maven 11) and DCBuilder (from Worldcoin Foundation) also participating.
The team is building a privacy-focused data platform that provides real-time verification of borrowers' assets, liabilities, and trading risks. Users can connect their custodial accounts, exchanges, and other related accounts to a dashboard to generate credit risk reports to share with lenders.
Borrowers can control which data to share and with whom to send it.
Accountable was founded in 2022, coinciding with the collapse of the centralized crypto lending market, with multiple lending companies (like BlockFi, Celsius, and Genesis) declaring bankruptcy. These companies overexpanded, operating on misguided notions of trust.
Despite the contagion events from the failed algorithmic stablecoin TerraUSD to the notable hedge fund Three Arrows Capital that ultimately led to the collapse of the crypto exchange FTX, many applications built using crypto-native tools have still managed to maintain solvency.
Accountable also hopes to leverage cryptographic technology to enable borrowers and lenders to continue to interact without trust. However, unlike over-collateralized on-chain platforms like MakerDAO that successfully weathered market downturns, Accountable aims to help rebuild an under-collateralized lending ecosystem.
In crypto lending, price volatility has a significant impact, and protocols may require borrowers to provide capital exceeding the loan value, which will be automatically liquidated during market downturns to ensure a certain level of safety. While under-collateralized loans are also possible, a more comprehensive understanding of the borrower's repayment ability is required.
Accountable's Chief Technology Officer Ioan Moldovan stated, 'We believe that new advancements in cryptographic technology have the potential to revolutionize information exchange, with all valuable data being accompanied by levels of verifiability and cryptographic proof in the near future.'
Accountable's business model focuses on cryptographic technology that is advanced enough to fairly assess users' creditworthiness using on-chain data. However, unlike existing on-chain credit rating agencies like Credora, Accountable users are not required to share their API keys or wallet addresses, which would produce 'static' measurements, according to Accountable CEO Wojtek Pawlowski.
Pawlowski added that Accountable is reaching a data provider agreement with the software-as-a-service-focused Credora.
Despite the 'huge retail demand' for crypto-based returns, surviving lenders have implemented strict collateral requirements and higher interest rates after the bear market, limiting the market.
The platform utilizes a 'zero-knowledge transmission layer security'—a protocol that combines zero-knowledge proofs with network-native transmission layer security to securely transfer data between blockchain and Web2, as well as fully homomorphic encryption and other cryptographic techniques to help outline users' creditworthiness.
Users will be able to create a 'comprehensive financial profile' on the Accountable platform. This allows them to share confidential financial information with counterparties. Pawlowski pointed out that financial institutions are particularly unlikely to be willing to disclose (or 'open-source') their entire business model to enter the crypto market.
Accountable's technology can be used in 'any situation requiring verified data.' For example, exchanges or stablecoin issuers could theoretically prove their assets and liabilities in real-time without disclosing their actual holdings to show their solvency in 'proof of reserves' reports.
CyantArb Group stated in a statement, 'As a team focused on high-frequency trading, acquiring debt without compromising proprietary data is crucial to maintaining our competitive advantage.' The company stated it is using the platform to protect its proprietary trading strategies while keeping confidentiality with its lenders.
The company's current version has been developed for 16 months, initiated by Maven11, due to their lending pool with Orthogonal Trading being liquidated after the FTX collapse. Accountable currently has eight employees and plans to use the funding to pay salaries. The company plans to conduct another funding round in the second quarter of 2025.