Yala, a crypto startup developing a bitcoin-backed stablecoin, has raised $8 million in a seed funding round co-led by Polychain Capital and Ethereal Ventures.
Other investors in the round included Galaxy Vision Hill, Anagram, ABCDE, Amber Group, HashKey Capital, Satoshi Lab and UTXO Management, Yala said Thursday. This was an oversubscribed seed round, Yala co-founder and COO Kaitai Chang told The Block, adding that the firm initially aimed to raise $5 million.
Yala began raising capital for the seed round in March and closed it last month, Chang said. He added that the round was structured as a simple agreement for future equity (SAFE) with token warrants but declined to comment on Yala's valuation.
Yala was founded in January of this year by Chang, a former Binance Labs employee; Bin Liu, who also co-founded Alchemy Pay; and Vicky Fu, a former director of engineering at Circle. The trio aims to advance the development and expansion of decentralized finance on Bitcoin.
Yala claimed that investors have already committed over 2,000 BTC (currently worth around $126 million) in deposits for its protocol. While Yala currently accepts BTC as collateral, Chang said the protocol plans to also accept Bitcoin liquid staking tokens in the future.
Yala is also adding an insurance feature to its protocol to address challenges such as Bitcoin's 10-minute block production time, Chang explained. He said the addition safeguards users from liquidation caused by bitcoin price volatility or high-risk activities like restaking.
"The insurance module, Takaful, represents Yala's innovative approach to DeFi on Bitcoin, creating a cooperative framework where participants, insurers and shareholders collectively manage risks and benefits," Chang said. "It details insurers' roles in fund management, contract formulation and governance, incorporating 'qard hasan' loans [interest-free, based on Islamic ethics] as a fallback for insufficient funds, thereby ensuring a resilient, compliant and community-driven financial environment."
The Yala protocol is currently under development, with the testnet expected to launch this month and the mainnet in the first quarter of next year, Chang said.
YALA, the protocol's governance token, is also expected to launch alongside the mainnet.
Currently, 23 people work remotely for Yala across the globe, Chang said, adding that he plans to expand the team across functions such as business development, engineering and marketing.
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