Galoy, an open source payments solutions provider has announced a $4 million capital raise. The firm behind El Salvador’s Bitcoin beach wallet also introduced a new product dubbed Stablesats – a bitcoin-backed synthetic dollar.
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The financing round chaired by Hivemind Ventures also had participation from Valor Equity Partners, Timechain, El Zonte Capital, Kingsway Capital, Trammell Venture Partners, and AlphaPoint.
The new funds will be used to further improve its core Bitcoin banking platform GaloyMoney.
GaloyMoney is a versatile API, and an enterprise-ready Lightning gateway providing organizations access to Lightning payments.
“With GaloyMoney, organizations of any type and size can become its bank, plugging into the first open monetary and payments standard” according to Max Webster, the founder of Hivemind Ventures.
The Lighting Network (LN), often touted as the solution to bitcoin’s problem, is a layer-2 solution that runs on the Bitcoin blockchain. It is designed to speed up transaction processing time and decrease the associated cost on the Bitcoin blockchain.
Because the platform is open-source, it becomes more secure, reliable, and faster with every new customer’s implementation.
Galoy Introduces Stablesats
Alongside the announcement of its fundraising, Galoy launches a new feature on its platform dubbed Stablesats.
Stablesats, according to the firm, is a USD account where users can hold dollar equivalent balances in their lightning wallet thereby protecting themselves from fluctuations in Bitcoin price.
The wallet pledges the user’s bitcoin as collateral to a centralized exchange to purchase the derivatives contracts. The contracts are used to hedge the BTC, supporting the dollar account in the wallet.
Essentially, Galoy’s Stablesats uses a particular Bitcoin derivative market instrument called perpetual inverse swap to create a synthetic dollar pegged to the USD.
The new product allows users to transact over the lightning network while hedging against the fluctuating crypto market at the same time.
Notably, Galoy’s new feature differs from a stablecoin in that it requires no token or third party to work. It is just Bitcoin stabilizing into a dollar balance. If successful, this product might onboard the next billion people into crypto as it will integrate fiat currency into Bitcoin. It will also cancel out the price volatility that has kept many out of the nascent asset.
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