dAMM Finance

dAMM Finance operates as an institutional, uncollateralized lending platform for a wide array of digital tokens, featuring algorithmically determined interest rates. The platform was launched in response to the lack of transparency and the irresponsible practices witnessed in the centralized crypto lending space, aiming to establish full on-chain transparency. It was founded by Josh Baker, who also founded the market-neutral market maker System 9 and serves as the CEO of dAMM Finance. The protocol was developed to address specific problems Baker's firm faced, namely the limited availability of non-stablecoin assets for borrowing on other institutional platforms.

The business serves institutional clients, such as token issuers, market makers, and investors, who can borrow assets to provide liquidity and execute trades across various centralized and decentralized venues. Borrowers on the platform are limited to trusted institutions and market-neutral trading firms, a measure designed to enhance security for lenders. These borrowers must enter into a Master Loan Agreement with the dAMM Foundation, making the terms legally enforceable. This hybrid centralized-decentralized model allows dAMM to offer undercollateralized loans, a key differentiator from overcollateralized platforms like Aave and Compound. Revenue is generated from the interest paid on loans, with rates algorithmically adjusting based on the supply and demand (utilization rate) of assets within a liquidity pool.

The core product is a decentralized finance (DeFi) lending application that provides lenders with complete visibility into borrower activity on-chain. Lenders deposit their digital assets into specific liquidity pools and, in return, earn yields. A significant milestone was reached in September 2022 when the platform secured $2 million in a private token sale from investors including Prismatic, WOO Network, LedgerPrime, and Fisher8. Within hours of its launch, dAMM Finance attracted over $1.1 million in liquidity, offering yields over 10% on more than 20 token pools. The platform is designed to be capital-efficient, allowing for the listing of a large number of tokens, with a goal of reaching 200 within its first year.

Keywords: institutional lending, uncollateralized loans, decentralized finance, DeFi, crypto lending, token borrowing, algorithmic interest rates, on-chain transparency, market makers, liquidity pools, digital assets, Josh Baker, System 9, crypto credit, DeFi protocol, token lending, asset-backed lending, financial transparency, capital efficiency, blockchain finance