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Fintech Firm Galoy Raises $4 Million, Startup Introduces Bitcoin-Backed Synthetic Dollar Product

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On Wednesday, El Salvador-based Bitcoin Beach Wallet company Galoy announced that the company has raised $4 million in an investment round led by Hivemind Ventures. On the same day, the startup launched a new product called Stablesats, a stablecoin concept that uses derivative contracts to create a synthetic dollar backed by Bitcoin pegged to the US dollar. The Stablesats product allows people to transact over the Lightning network and hedge the volatility of the cryptocurrency market at the same time.

Fintech startup Galoy raises $4M in funding round led by Hivemind Ventures

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Galoi, the startup behind Bitcoin Beach Wallet, made two announcements on August 3rd. The first announcement states that the company has raised $4 million from strategic investors to “develop its own bitcoin banking infrastructure.” The funding round was led by Hivemind Ventures, but recent funding has come from Alphapoint, Valor Equity Partners, Timechain, El Zonte Capital, Kingsway Capital and Trammell Venture Partners. Galoy also stated that “other top Bitcoin investors” have joined the funding round.

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Hivemind Ventures founder Max Webster believes that open source Bitcoin banking is very important to support the global adoption of technologies such as the Lightning Network. “Galoy significantly lowers the barrier for any community or organization to become their own bank and connect to the world’s first open money and payment standard,” Webster explained in a press statement.

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Lightning Network (LN) is a Layer 2 (L2) protocol built on top of Bitcoin that aims to scale the payment network and enable peer-to-peer transactions with lower fees than on-chain transactions. Galoy Founder Nicholas Berti truly believes LN is the future BTC payments. “It’s no secret that Bitcoin and Lightning are disrupting traditional finance,” Bertie noted during the fundraising announcement. “We see the Galoy team, members and clients as a community working together to build a bridge to a more open and inclusive global financial system.”

Galoi Reveals Stablesats, a Bitcoin-Backed Synthetic Dollar Powered by the Lightning Network

Currently, the value locked in the LN system is approximately $79.60 million, or about3,418.14 BTC. In addition to the fundraising announcement, Galoi also unveiled a new product called Stablesats. Galoy detailed on his blog that the Stablesats product is one of the latest features added to the crypto payment platform. “As an alternative to stablecoins or fiat banking integration, Stablesats is using derivatives contracts to create a Bitcoin-backed synthetic dollar pegged to the US dollar,” Galoi’s blog post reads. Galoi’s announcement adds:

This allows dollar accounts to be used inside Lightning wallets, solving one of the biggest problems for people using bitcoin for everyday transactions: short-term exchange rate volatility.

Bertie believes technologies like the Lightning Network and Stablesats will help digital transactions flourish in regions around the world. “Bitcoin has brought digital transactions to previously unbanked communities in Latin America, Africa and beyond,” Bertie said on Wednesday. “However, its volatility makes it difficult to manage financial liabilities. With Stablesats-enabled Lightning wallets, users can send, receive, and store money in their USD account in addition to their default. BTC Account. Although their dollar value [bitcoin] fluctuates, $1 in their USD account remains $1 regardless of the bitcoin exchange rate.”

The Stablesats product has its own Web site which gives a detailed description of what it is and how to use this technology. The open source Galoy codebase for Stablesats and its other products can be seen at Github. Stablesats, in particular, uses “a tool called a perpetual reverse swap to create a synthetic US dollar,” and the team notes that there are “other interesting possibilities to explore.”

What do you think about Galoi raising $4 million from strategic investors? What do you think of Galoy’s Stablesats? Let us know what you think about it in the comments section below.

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Credit : news.bitcoin.com

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