DeFi lending startup RociFi closed on a $2.7M seed round

Another DeFi company is making money moves in Pittsburgh.

RociFi, a local startup specializing in the development of a decentralized zero and under-collateralized lending protocol, announced that it raised a seed round of $2.7 million. The round, which officially closed in November 2021, was funded by Arrington Capital, GoldenTree Asset Management, NEXO Capital, LD Capital and Skynet Trading.

In the world of decentralized finance, lending protocols enable peer-to-peer lending without third-party intermediaries. While decentralized lending protocols offer benefits to borrowers and lenders alike — the accessibility and anonymity for borrowers, and the chance to earn interest on crypto assets for lenders — borrowers often have to over-collateralize their loans to make up for the highly variable value of crypto assets today.

RociFi’s protocol aims to resolve this, by using on-chain data, machine learning and decentralized identity data to create the opportunity for zero and under-collateralized loans on the blockchain. To do that, RociFi assigns trustworthiness scores to borrowers with digital identities on Web3 and allows DeFi lenders to base their decisions on those credit risk scores. In layman’s terms: It’s essentially the creation of credit scores for the blockchain.

“Undercollateralized capital markets represent one of the biggest opportunities to transform capital efficiency in crypto,” said Ninor Mansor, partner at Arrington Capital, in a statement. “The distinct lack of non-economic recourse in DeFi means other types of ‘social capital’ cannot be deployed by borrowers. RociFi changes the game, introducing the idea of on-chain credit scoring as well as NFT-based identity.”

Much of the new funding will go toward product launch and team expansion, CEO Christopher Brookins said.

While the company currently operates on a remote basis, its cofounder and CEO Christopher Brookins is based in Pittsburgh. Previously, Brookins was the founder and chief investment officer of crypto investment tool startup Valiendero Digital Assets. He was also the founder and CEO of data-driven research and venture firm Pugilist Ventures and the business development manager for CivicScience, per LinkedIn. He’s also an alumnus of both the University of Pittsburgh and Carnegie Mellon University’s Tepper School of Business.

Much of the new funding will go toward product launch and team expansion, Brookins told Technical.ly in an email.

“We are thrilled to be able to utilize the seed funds to expand the RociFi Labs team and take the product to market,” he said. “We will increase the size of the engineering team and launch the protocol, taking advantage of the growing interest in decentralized finance from the traditional finance industry.”

Right now, RociFi has a total of 10 employees, Brookins said, with LinkedIn indicating that some are based in Berlin, Russia and Pakistan. The CEO added that the company will continue to hire across the globe as it grows.

“Our primary goal is hiring the best talent no matter the geographic location, but we’re always keen to consider Pittsburgh talent given the hotbed of universities,” he said.

RociFi is one of several recent Pittsburgh efforts in the realm of Web3 and blockchain technology. February saw the launch of a new Web3-focused meetup led in part by representatives from Stronghold Digital Mining, while traction has increased for other DeFi tech like Confluence Analytics. And a new blockchain-based gamer platform took home the top graduate prize at last month’s McGinnis Venture Competition.

Now, RociFi will add one more push to that list as the startup uses its new capital to move beyond its current testing phase (“testnet”) and roll out a phased, full-scale launch to “mainnet” by the second quarter of this year. Once it reaches the final phase, RociFi’s product will be available to everyone, Brookins said.

“We’ll be utilizing a phased approach to growing our number of unique loans outstanding and TVL (total value locked) to mitigate risk as we bring both lenders and borrows onto the platform. We want to do this right, from the start, and prove the concept of our mission,” he told Technical.ly. “Finally, we are looking for partnerships with both trusted decentralized autonomous organizations (DAOs) and traditional finance (TradFi) to integrate and build on top of the RociFi platform.”

Sophie Burkholder is a 2021-2022 corps member for Report for America, an initiative of The Groundtruth Project that pairs young journalists with local newsrooms. This position is supported by the Heinz Endowments.