First Parametric Risk Management Marketplace for DeFi, Risk Harbor, Launches on Mainnet
- Backed by the largest DeFi fund, Framework Ventures, and blockchain-centric asset manager, Pantera Capital, Risk Harbor offers first-of-its-kind fully automated protection to DeFi
Risk Harbor, a permissionless risk management marketplace for decentralized finance, launched on mainnet with a $3.25M seed round co-led by Framework Ventures and Pantera Capital with additional support from Bain Capital Ventures, Digital Currency Group, Coinbase Ventures, and Nima Capital. The launch establishes Risk Harbor as the first-ever fully automated and impartial risk management marketplace for DeFi participants and paves the way for greater institutional adoption of decentralized financial services.
Co-founded by Raouf Ben-Har and Drew Patel, Risk Harbor operates as a two-sided marketplace in which DeFi depositors are able to purchase protection for their capital in DeFi projects, while others are able to underwrite that protection in return for premiums. The platform, previously in private beta, has nearly $2M in liquidity locked in. Risk Harbor, which also has a presence on Polygon, uniquely utilizes an automated and impartial algorithmic claims process to protect users against smart contract attacks in an entirely secure and objective manner. The efficiency of such a system also allows participants to enjoy an instant claims and payout process while offering the lowest rates with market-informed dynamic pricing.
“Existing risk management platforms suffer from prisoner’s dilemma,” said Drew Patel, co-founder of Risk Harbor. “These protocols are dependent on underwriters that dictate whether a claim should be paid out or not and naturally, underwriters want to maximize policies sold while minimizing claims paid out. In this situation, policyholders are beholden to misaligned underwriters and have no other recourse. With Risk Harbor, transparent and impartial smart contracts decide whether a claim is valid, thereby removing third-party intermediaries while creating an entirely fair and inclusive claims process.”
The raise will support Risk Harbor in expanding protection services cross-chain to accommodate a variety of protocols and wherever demand flows. Additionally, the funds will enable Risk Harbor to scale internal operations and research and development for future offerings. In anticipation of the mainnet launch, the funds have also been utilized to design a revamped user interface with a heavy focus on an easy, delightful, and informative user-experience for both retail and institutional investors.
“By offering market-priced protection that anyone can underwrite or purchase with no oracles, no delay in claims processing, and no human ambiguity, Risk Harbor is building a truly decentralized financial system,” said Vance Spencer, co-founder of Framework Ventures. “To those still new to, or wary of, the DeFi community, where the fear of risk overwhelms the benefits of participation, Risk Harbor provides security and protection, thereby paving the way for greater adoption of DeFi services beyond the immediate community.”
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In addition to participation from major funds, an impressive roster of angel investors also contributed to the raise, including Anthony Pompliano of Pomp Investments, Noah Jessop of Proof Group, Ashleigh Schap of Uniswap, Nikil Viswanathan and Joe Lau of Alchemy, Do Kwon of Terra Money, Seb Audet of Zapper, Tyler Ward of BarnBridge, and Ashish Rajpurohit formerly of Polygon.
“What makes Risk Harbor exciting is not only the fact that it offers protection for DeFi protocols without requiring an oracle, but that it also should be more capital efficient than any other model due to its Berkshire-like structure that enables cover providers to earn a yield on top of their premiums,” said Joey Krug, Co-Chief Investment Officer of Pantera Capital. “After they crack smart contract protection, there’s no reason they couldn’t expand long term into other areas as well.”
Stefan Cohen, Partner at Bain Capital Ventures added: “One of the single largest barriers to mainstream DeFi adoption is the lack of trusted cover providers that can protect users against smart contract and liquidity risks. Risk Harbor’s deterministic parametric protection protocol is a necessary primitive for DeFi and will usher in a new wave of capital and cover underwriting use cases.”
Investor Anthony Pompliano concluded, “Most of the legacy world is going to transition to run on decentralized, open systems in the future. Risk management is one of the mission critical services that every market participant, from entrepreneurs to investors to users, will need. The idea of a chain agnostic protection product focused on capital efficiency is powerful and I’m excited to work with the Risk Harbor team to capitalize on the opportunity.”