TechStars-Backed Alkemi Enters DeFi Race With $16 Million Liquidity Pool

A new type of decentralized finance app wants to boost crypto-market liquidity by offering you interest on your coins.

Today at the Techstars Blockchain Accelerator demo day, Alkemi CEO Ryan Breen will unveil a crypto liquidity pool deal worth $16 million from industry veterans like Joseph Weinberg, chairman of the data network Shyft, and Alex Friedberg of BXB Capital.

Alkemi is looking to create a liquidity system for exchanges by making an accessible honeypot that service providers can dip into when demand increases faster than supply.

"You have a reduction in fee rate across the space over time because you have general liquidity across the space. You have a faster rate of execution."

The Alkemi protocol will let users connect their personal wallets to a smart contract via a mobile app that, like a savings account at a bank, allows exchanges to use those funds for settlements while users determine their own lockup timeframes.

Breen said liquidity across the space remains a hurdle.

Alkemi is betting that providing liquidity pools will save exchanges and institutional funds money.

"The biggest problems arise with surging demand where liquidity dries up," Frank Schuil, CEO of the Swedish exchange Safello said in reference to the broader market.

While Safello isn't a member of the Alkemi consortium, Weinberg said this is precisely the type of friction he hopes the new DeFi startup can address.

"A lot of the times you have exchanges that have to re-balance their own books, and not just exchanges, all kids of liquidity pools. The question is can you have smart contracts controlled by participants that make the flow of capital more efficient?".