After the turbulence in the crypto lending industry, marked by the collapse of giants like Genesis, BlockFi, and Celsius, an undeniable fact is gradually emerging: providing efficient and convenient loan services while ensuring user safety in self-custody has become the core proposition for industry development. Today, we introduce a financial application that supports Bitcoin lending: Lava.
By the end of 2024, Lava completed a $10 million Series A financing, led by Founders Fund and Khosla Ventures. Founders Fund has been relatively active in the crypto space, investing this year in popular projects such as Polymarket, modular blockchain project Avail, Pudgy Penguins' parent company Igloo, the Rollup-as-a-Service platform Caldera, Bitcoin Rollup project Citrea, Solana infrastructure provider Helius, and the open-source AI platform Sentient.
Khosla Ventures, the private venture capital firm founded by billionaire venture capitalist Vinod Khosla, has gained fame for its early investments in companies like Impossible Foods, Instacart, Affirm, DoorDash, Square, and OpenAI. Although Khosla Ventures has made little foray into the crypto space since its investment in Sam Altman's Worldcoin project in 2022, its investment in Lava undoubtedly reaffirms its strong confidence in Lava.
What is Lava?
Lava, a Bitcoin financial application with the slogan 'Save in Bitcoin, Spend in Dollars', is dedicated to building an application for Bitcoin savings and dollar spending.
The founder of Lava is Shehzan Maredia, who also serves as CEO and CTO. The majority of the introductory articles on the Lava website are written by Shehzan Maredia himself. The Lava team is divided into two core teams: the Vault team focuses on building self-custody applications for Bitcoin and dollars, while the Application team is dedicated to developing various features needed to support self-custody applications.
Lava Vault, as Lava's flagship product, is designed for users who wish to save in Bitcoin and spend in dollars, such as Bitcoin holders, miners, traders, Bitcoin enthusiasts, immigrants, and users from developing countries.
Lava Vault is now available on iOS and Android, offering three main features: Lava Free Pay, Lava Exchange, and Lava Smart Key.
Among them, Lava Free Pay provides instant, free, and global payment services, allowing users to make payments on the blockchain without holding gas tokens, greatly enhancing the experience for self-custody users. Lava currently supports USDC on the Solana blockchain and plans to integrate other chains in the future.
Lava Exchange provides users with a convenient channel for purchasing and withdrawing Bitcoin. It not only allows users to directly purchase assets to self-custody accounts but also supports withdrawing funds to bank accounts. Essentially, Lava Exchange is a centralized exchange aggregator that can guide users to the optimal price trading path. In the future, it will integrate more centralized exchanges and aggregate across decentralized exchanges to provide users with a unified exchange aggregator service.
After purchasing or depositing Bitcoin, users can use the Lava Loans Protocol to collateralize Bitcoin to borrow dollars, with Lava stating interest rates as low as 4%. Users can choose to repay the loan with appreciated Bitcoin (provided the Bitcoin price rises) after the loan term ends and receive the remaining balance, or they can adjust the loan amount before the loan term ends to suit their needs.
Subsequently, users can transfer the borrowed dollars directly from Lava Vault to their bank accounts. In the future, the Lava Card will also support users spending dollars directly from Lava Vault.
Lava Smart Key is the key to Lava's secure self-custody. It does not require the use of mnemonic phrases but supports the creation of a 2-of-2 backup mechanism. One half of the backup is associated with the Seed and is encrypted and stored in iCloud or Google Drive; the other half is bound to an encrypted key stored on a private key server, which can only be authenticated with a user-defined 4-digit Lava recovery PIN code. This backup mechanism not only significantly ensures the safety of funds but also provides a convenient asset recovery pathway.
For businesses, Lava offers the opportunity to earn digital dollars through Bitcoin-backed loans. For developers, Lava supports the integration of various features such as Lava Free Pay, Lava Loans Protocol, Lava Exchange, and Lava Smart Key.
It is worth mentioning that, unlike many other crypto startups, Lava does not intend to launch its own token, and its Series A financing has been conducted through equity financing.
