By Xiaobing
On October 6, Peter Thiel’s Founders Fund led a $5 million token purchase in DeFi protocol Anvil. Other participating investors included Pantera Capital, Theta Blockchain Ventures, Bullish (NYSE: BLSH), and Protoscale Capital. Individual investors included Compound founder Robert Leshner (now CEO of Superstate) and Celo co-founder Rene Reinsberg.
On the day the news was announced, ANVL rose more than 83%, briefly reaching a market cap of about $109 million.
Two details of this deal are worth unpacking. Founders Fund bought ANVL tokens, not equity in the company behind Anvil. The tokens came from Anvil’s existing treasury; no new tokens were issued.
What is Anvil?
The most important step to understanding Anvil is knowing what it is not.
It is not a lending protocol. On Aave or Compound, users deposit assets as collateral and then borrow another asset, paying interest. If the collateral loses value, it may be liquidated.
Anvil does something completely different. Users lock ETH or USDC in an Anvil vault and receive an “on-chain letter of credit” (LOC). This letter of credit is a verifiable financial guarantee, proving that “this person has sufficient assets to back their ability to honor their financial commitments.”
Letters of credit are among the oldest financial instruments in the business world. The logic behind a bank letter of credit is simple: the buyer’s bank issues a promise to the seller, guaranteeing payment as long as the seller provides the agreed-upon documents, such as shipping documents. Trillions of dollars’ worth of goods in global trade rely on this mechanism.
Anvil brings this model on-chain and removes the intermediary bank. Users lock up their own assets, smart contracts automatically verify that the collateral is sufficient, and the status of the letter of credit is visible in real time to any counterparty.
Founders Fund partner Joey Krug (co-founder of Augur) said in the announcement: “Businesses need to know that the promises behind payments and credit will be honored. Anvil lets them back those promises with verifiable digital asset collateral.”
What is it used for?
“Letter of credit” may still sound too abstract. Here are a few use cases that are already live or being integrated.
Payment guarantees. In March 2025, Flexa—the crypto payments network previously co-founded by Tyler Spalding—integrated its Capacity v3 system with Anvil. When a merchant accepts a crypto payment through Flexa, Anvil’s letter of credit guarantees final settlement of the payment. Even if the underlying blockchain confirmation takes time, the merchant can immediately receive confirmation that “payment is guaranteed.”
Instant deposits at exchanges. Bullish (CoinDesk’s parent company, listed on the NYSE) is exploring the use of Anvil to enable traders to deposit margin instantly. In the traditional process, traders transferring assets from an external wallet have to wait for on-chain confirmation. With an Anvil letter of credit, the exchange can extend trading credit as soon as the assets are locked in a vault.
Business-to-business credit guarantees. Anvil’s SDK allows businesses to integrate the protocol without writing blockchain code. Consensus and Bitcoin.com are also listed as partners.
What these use cases have in common is that there’s no need to “borrow” anything; you just need to “prove” that you have funds and that they’ve been locked and cannot be moved.
Protocol economics: zero fees + governance token
Anvil charges no transaction fees at the protocol level. This is a design choice that sets it apart from most DeFi protocols.
No fees means the protocol itself generates no direct revenue. Its economic model relies entirely on the governance value of the ANVL token: holders vote on which types of collateral the protocol supports, how letter-of-credit parameters are set, which external contracts can connect, and more.
ANVL has a total supply of 100 billion tokens, with about 80 billion currently in circulation. The token’s value does not come from protocol distributions (since there are no fees to distribute), but from the idea that “if Anvil becomes infrastructure for commercial credit guarantees, then governance rights over that infrastructure will be valuable.”
This is an extreme long-term bet. If Anvil’s usage grows large enough, governance rights will become scarce and valuable; if usage remains limited, those rights will be nothing more than empty words.
Beyond the optimistic narrative, we need to face a few hard numbers.
At the time of writing, Anvil’s TVL on DefiLlama is about $14 million. That may not seem like much, but it ranks first in the “Collateral Management” category, accounting for more than 90% of the category’s total TVL—though the sector itself is still tiny, with only two tracked protocols.
But the historical trend in TVL tells a more revealing story. In July 2025, Anvil’s TVL reached a peak of around 36,000 ETH (about $109 million). It has since fallen steadily to the current $14 million, a drop of about 87%.
ANVL is currently priced at about $0.00098, down roughly 89% from its all-time high of $0.0093 on January 3, 2025. Even after an 83% single-day gain following this news, the token remains near its historical lows.
Key considerations for the investment thesis
What Founders Fund bought this time wasn’t a token in “yet another DeFi lending protocol,” but a bet on whether on-chain letters of credit can become as large a category as on-chain lending.
This is a relatively small bet: $5 million is just an exploratory position for Founders Fund (which completed its largest-ever fundraising round of $6 billion in May 2026). But Joey Krug’s personal endorsement, along with Robert Leshner’s investment as an individual, carries more significance as a signal than as a sum of money.
Several variables to keep tracking:
Since the SDK launched, how many businesses have actually started integrating Anvil? Of the partners listed so far—Flexa, Bullish, Consensus, and Bitcoin.com—Flexa is the only one to have completed a full integration. There’s a huge difference between “exploring” and “deployed.”
Is a zero-fee model sustainable? At this stage, development can be funded with treasury tokens, but in the long run, the protocol will either need to introduce some form of fee or rely on an increase in the price of ANVL to fund the development team.
Is there enough on-chain demand for letters of credit? The traditional global letter-of-credit market is worth trillions of dollars, but how much of that demand will move on-chain depends on the pace of crypto adoption among businesses.