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Coinbase Ventures invests in DeFi platform Saffron Finance

Saffron Finance pioneered risk-adjusted yields in the DeFi space to enable the migration of assets from traditional finance

Decentralised Finance (DeFi) protocol Saffron Finance announced yesterday that it was facilitating the migration of assets from traditional finance to DeFi through new strategic partnerships. The funding round was led by Dragonfly Capital and also included the participation of Coinbase Ventures, Multicoin Capital, DeFi Holdings, Leo Cheng and Tegan Kline.

Saffron pioneered tranched risk in the DeFi space – this is a risk adjustment concept from traditional finance through which Saffron gives liquidity providers the option to choose the level of risk they feel comfortable with. Saffron users can then gain exposure to their customised risk and reward profiles by collateralising their crypto assets on the platform, which deploys liquidity to third-party DeFi lending pools automatically.

Since launching in November 2020, the Saffron protocol has reached more than $50 million in total value locked across almost two dozen asset pools. The protocol’s native governance token, SFI, has been widely distributed to early adopters and currently has a market cap of over $200 million.

Dragonfly Capital said of their involvement, “The buying and selling of risk is a critical component of any mature financial stack, and Saffron is the best team we’ve seen building a scalable solution here. Risk tranching is common in traditional finance, and Saffron leverages the composability of DeFi to add risk re-adjustment options to the crypto-native financial product landscape. We’re incredibly excited to support Saffron as they build out the future of risk management in DeFi.”

Saffron has seen significant development recently, with a security upgrade to its smart contract system which implemented a new multisig structure, and the launch of Saffron V2 on Binance Smart Chain and Ethereum, which introduced new features like perpetual staking and liquidity targeting.

Saffron’s anonymous developer, psykeeper, commented, “Saffron is designed to enable the migration of billions of dollars in yield-based financial products from centralized financial institutions to decentralized open source financial networks by balancing risk and reward for individuals and institutions who deploy capital into the DeFi space… Our new partners bring a tremendous amount of capital markets and DeFi expertise, and will help inform the next phase of Saffron’s growth.”

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