This seed funding round was oversubscribed, a testament to the growing interest in innovative financial solutions within the decentralized finance (DeFi) ecosystem.
Kaitai Chang, co-founder and COO of Yala, revealed that the company initially aimed to raise $5 million, but the overwhelming interest from investors allowed them to secure more capital than anticipated.
Chang noted the importance of this funding in accelerating Yala’s development efforts and expanding its reach in the competitive crypto landscape.
Yala commenced its capital-raising efforts for the seed round in March and successfully closed it last month. The structure of this round was designed as a Simple Agreement for Future Equity (SAFE) combined with token warrants.
However, Chang refrained from commenting on the valuation of Yala at this stage, indicating a focus on growth and development rather than immediate financial metrics.
Founded in January 2024, Yala emerged from the collective expertise of its founders, which includes Kaitai Chang, a former employee at Binance Labs; Bin Liu, who co-founded Alchemy Pay; and Vicky Fu, a former engineering director at Circle. The trio brings a wealth of experience in the crypto and financial technology sectors, aiming to enhance the development and expansion of decentralized finance on the Bitcoin blockchain.
Introducing YU: The Bitcoin-Backed Stablecoin
At the heart of Yala’s vision is the development of a bitcoin-backed, yield-earning stablecoin known as YU. This innovative stablecoin aims to provide users with the opportunity to mint YU by depositing Bitcoin onto any target blockchain through a feature called MetaMint.
Chang described MetaMint as a cross-chain protocol designed for the instant conversion of native Bitcoin into stablecoins on Ethereum Virtual Machine (EVM)-compatible chains.
This functionality is intended to simplify the user experience by eliminating the need for intermediate wrapping processes, making it more accessible for users to engage with stablecoins.
One of the compelling aspects of Yala’s offering is the significant interest it has already generated from investors. Yala claims that investors have committed over 2,000 BTC, which is currently valued at approximately $126 million, in deposits for its protocol.
While Yala presently accepts Bitcoin as collateral, the protocol has plans to expand its offerings to include Bitcoin liquid staking tokens in the future, thus broadening its utility and appeal to a wider audience.
Addressing Challenges with Innovative Solutions
Recognizing the challenges that come with Bitcoin’s 10-minute block production time, Yala is also incorporating an insurance feature into its protocol.
Chang explained that this addition is crucial for protecting users from potential liquidation events triggered by Bitcoin price volatility or high-risk activities such as restaking.
Yala’s insurance module, called Takaful, represents a novel approach to risk management in the DeFi landscape. It establishes a cooperative framework in which participants, insurers, and shareholders collaboratively manage risks and benefits.
This module details the roles of insurers in fund management, contract formulation, and governance, integrating ‘qard hasan’ loans, which are interest-free and based on Islamic ethics, as a safety net for insufficient funds.
This innovative solution aims to create a resilient, compliant, and community-driven financial environment for Yala’s users.
Upcoming Developments and Future Plans
The Yala protocol is currently under active development, with plans to launch a testnet within this month. The mainnet is scheduled to go live in the first quarter of the following year, signifying Yala’s commitment to timely execution and responsiveness to market demands.
Alongside the mainnet launch, YALA, the governance token for the protocol, is also expected to be introduced, allowing users to participate actively in the governance and decision-making processes surrounding the platform.
As of now, Yala employs a team of 23 individuals who work remotely from various locations around the world. Chang expressed his intention to expand the team across multiple functions, including business development, engineering, and marketing, to support the company’s growth trajectory.
In conclusion, Yala’s successful fundraising of $8 million marks an important step in its mission to revolutionize the stablecoin market through innovative solutions and strong partnerships.
With the support of leading venture capital firms and a focus on user experience and risk management, Yala is poised to make significant strides in the evolving landscape of decentralized finance on the Bitcoin blockchain.
As the development progresses, stakeholders and investors alike will be watching closely to see how Yala’s vision unfolds in the coming months.
