Bima Labs Emerges from Stealth with $2.5M Funding Round to Build USDD Stablecoin Backed by Bitcoin Liquid Staking

The fundraising was executed as equity with token warrants, Bima Labs founder and CEO Siddarth Sridhar told The Block.

Web3 startup Bima Labs has come out of stealth mode with a $2.5 million seed funding round, which will be used to launch a stablecoin backed by Bitcoin (BTC).

The round was led by Portal Ventures and included participation from Draper Goren Blockchain, Sats Ventures, Luxor Technology, CoreDAO and Halo Capital. Ankr’s Ryan Fang, Brian Crain of Chorus One, Jeffrey Feng from Sei Labs, and Smokey of Berachain also joined the round as angel investors.

The fundraising was executed as equity with token warrants, Bima Labs founder and CEO Siddarth Sridhar told The Block.

Bima Labs is building USDD, a stablecoin that is pegged to the U.S. dollar and backed by Bitcoin. The stablecoin can be minted by depositing Bitcoin liquid staking and restaking tokens as collateral. The project plans to accept collateral from multiple chains, including Bitcoin, Bitcoin L2s, Ethereum, EVM-compatible networks, and Solana.

“Users can deposit their Bitcoin liquid staking tokens (LSTs) and liquid restaking tokens (LRTs) from a wide variety of providers to mint USBD from Lorenzo, Lombard, pStake, Bedrock, Acre, DLC.link, ALEX Labs BTC, and more,” said Sridhar.

Once users mint USBD, they can use it for lending, borrowing and swapping, among other use cases. “We envision a world of new credit, debt and hybrid use cases powered by USBD, whether you’re in China, the U.S., Brazil or Europe,” Sridhar added.

This announcement comes at a time when Bitcoin is emerging fast as a major dApp ecosystem, driven by the rising demand for crypto staking and restaking protocols and now stablecoins.

“Whatever was accomplished on Ethereum within 4-5 years is being done on Bitcoin within a span of 4-5 months,” said Sridhar. “The Bitcoin ecosystem has a higher total addressable market, more asset utilization in places like Latin America and the Middle East and North Africa, and ultimately more potential to unlock higher yield opportunities.”

Currently in testnet, USBD is planned for a mainnet launch in the fourth quarter of 2024. The project also plans to launch its governance token BIMA before the end of the year, according to Sridhar.