Carapace, a protocol to connect buyers and sellers of protection against default risk for under-collateralized DeFi (decentralized finance) loans, has raised $2.5 million in its pre-seed funding round for its development company Starlings Lab and the launch of its test version.

The funding round saw participation from NFX, Titan Capital, and other top investors.

As per the startup, the raised funds will primarily be used to grow the technical team and launch the protocol that requires comprehensive legal diligence and technical audits.

Carapace | Protection Against Default Risk In Crypto Loans

Co-founded by Rohit Sabnis and Taisuke Mino, Carapace is building a protocol for decentralized protection against default risk in unsecured crypto loans. It enables users to invest in DeFi with protection against credit default risk.

As per Rohit Sabnis, Co-founder of Carapace, the current bear market for crypto has forced participants to be more aware of the return-risk tradeoff on their investments. This is where Carapace comes in and helps investors understand and mitigate credit risk on their DeFi loans.

Speaking about the development, Bipin Shah, Partner at Titan Capital, said,

“We invested in Rohit and Tai as they are strong founders who understand the DeFi space well. Titan wishes to support crypto infrastructure projects that solve real problems for users, and we see Carapace become a key building block of DeFi lending”.

As per the startup, the protocol will create a market that protects against default risk for under-collateralized DeFi loans and pilot with Goldfinch, a crypto credit protocol.

Additionally, India will be a crucial focus for the startup in terms of hiring, as the protocol would like to tap into the rich talent of engineers and credit experts in the country.

Commenting on the development, Morgan Beller, General Partner at NFX, said,

“Cryptoloans are growing at an incredible pace, from a nominal amount to more than $25B last year, and will only continue to explode. With very little protection for lenders of under-collateralized loans, Carapace’s protocol will provide a key piece of infrastructure that DeFi will need to grow.”

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