Cadence, An Ethereum-Based Commercial Debt Market, Goes Live With Coinbase Ventures Funds
A new Ethereum-based marketplace for commercial debt called Cadence has just gone live. The project, which is out on its test phase now, received $5.67 million USD in investments since the beginning of the year from several investors, including Coinbase Ventures.
According to the company, the main investors were, besides Coinbase Ventures, Recharge Capital, which led the round, Argo Ventures (the venture arm of the Argo Group) and InBlockchain.
Together, these companies gave most of the money acquired by Cadence this year, but individual investors were also accepted in the seed round. However, only some of them were actually able to participate.
Only the ones that were considered more “valuable” to the company were selected. The main reason was to let only people who were able to drive institutional up be a part of the project.
The new platform will be focused on both institutional and accredited investors and will have pools of commercial loans. The clients of the company can use the new platform in order to contribute with funds to packages of short-term loans that can help companies to pay their costs and receive the money with interest later.
Cadence’s founder and CEO Nelson Chu affirmed that the work of the company will be very important in order to help small and medium companies to grow more and to work more efficiently.
All investments will be made in a fully transparent way because of the Ethereum blockchain, which is being used to power the system.
In fact, this market is growing quite fast recently. Reports from BNY Mellon indicate that the private credit market was a $1 billion market back in 2017 and it has grown to hundreds of billions now. Some organizations, such as the Alternative Credit Council, believe that the market should hit $1 trillion USD by 2020.
How Will Cadence’s Business Work?
Cadence is set to offer short-term loans to its clients. The loans will be used to cover the expenses of companies. Obviously, they have to pay an interest, which will be around 10% yearly.
Part of the idea is to attract hedge funds that want some reliable way to use some cash that is just standing there unused. According to Chu, people can try the model to see if works and they will obviously see that it does. This way, they will put more money there after some time.
All the loans will have information about risk, sector of the company and other information and they will always be for multiple borrowers, which will help to diminish the risks of not being paid in the end.
Also, the platform will be fully integrated into the Bloomberg Terminal, which is used by some people who almost exclusively “live there”, according to Chu. This way, the platform was created to provide a way that people could make their money grow without incurring in many risks and losing their investments.