DeFi lending platform Sublime raises $2.5 million in seed funding – The Block Crypto

DeFi lending platform Sublime raises $2.5 million in seed funding – The Block Crypto

There is a new DeFi lending platform in the market that wants to let users stake their “digital reputations” to access loans. Called Sublime Finance, the platform wants to help borrowers tap into their “social capital.”

Sublime has received backing from investors such as Galaxy Digital and Electric Capital, both of which co-led its $2.5 million seed funding round. Other investors included FinTech Collective, Collab+Currency, and angel investors, including Jill Carlson Gunter and Ryan Selkis.

The funding was secured via a Simple Agreement for Future Tokens (SAFT) sale, Sublime founder Ritik Dutta told The Block. With the new capital, India-based Sublime plans to continue developing its platform and launch it in the coming weeks.

Replacing credit checks with on-chain histories

Sublime says today’s DeFi market mainly focuses on projects that require lending agreements to be overcollateralized. This means that borrowers have to lock in a higher value of collateral than they are borrowing. This system has drawbacks, according to Dutta, compared to the traditional lending market that usually involves an element of trust.

But instead of a typical credit check, Sublime will let users leverage their digital identities to get undercollateralized loans.

Each loan request will act as an independent pool on Sublime, meaning borrowers will be able to create customizable loan requests that lenders can fulfill. Lenders can assess borrowers by looking up their digital identities, past loan performance, and other users they have interacted with online.

In addition to social media profiles, Sublime will also support crypto and NFTs as collateral. To begin