Lava: Seamless integration of BTC savings, lending, and USD consumption

Lava completed a $10 million Series A financing in December, with investors including Khosla Ventures, one of the first investors in OpenAI.

Authored by: KarenZ, Foresight News

After the turmoil in the cryptocurrency lending industry, with giants like Genesis, BlockFi, and Celsius going bust one after another, an indisputable fact has gradually emerged: while ensuring user safety and self-custody, providing efficient and convenient loan services has become the core proposition of the industry. Today we are going to introduce a financial application Lava that supports bitcoin lending.

At the end of 2024, Lava completed a $10 million Series A financing, led by Founders Fund and Khosla Ventures. Founders Fund has been quite active in the Crypto field, investing in popular projects such as Polymarket, modular blockchain project Avail, Pudgy Penguins' parent company Igloo, Rollup-as-a-Service platform Caldera, Bitcoin Rollup project Citrea, Solana infrastructure provider Helius, and open-source AI platform Sentient this year.

Khosla Ventures, a private venture capital firm founded by billionaire venture capitalist Vinod Khosla, has gained fame for its early investments in companies such as Impossible Foods, Instacart, Affirm, DoorDash, Square, and OpenAI. Despite not having much involvement in the cryptocurrency field since its investment in Sam Altman's Worldcoin project in 2022, Khosla Ventures' investment in Lava undoubtedly showcases its strong confidence in Lava once again.

What is Lava?

LAVA, a Bitcoin financial application with the slogan 'Save in Bitcoin, Spend in Dollars,' is committed to building an application for saving Bitcoin and spending in dollars.

Lava's founder is Shehzan Maredia, who also serves as CEO and CTO. The vast majority of the introduction articles on the Lava website are also written by Shehzan Maredia himself. The Lava team is divided into two core teams: the Vault team and the Application team. The former focuses on building self-custody applications for Bitcoin and the US dollar, while the latter is dedicated to developing various functionalities to support self-custody applications.

Lava Vault, as the flagship product of Lava, is designed for users who want to save Bitcoin and spend in US dollars, such as Bitcoin holders, miners, traders, Bitcoin enthusiasts, immigrants, users in developing countries, etc.

Lava Vault has launched iOS and Android versions, offering three main functions: Lava Free Pay, Lava Exchange, and Lava Smart Key.

Among them, Lava Free Pay provides instant, free, and global payment services, allowing users to pay on the blockchain without holding Gas tokens, greatly improving the experience of self-hosted users. Lava currently supports USDC on the Solana blockchain and plans to integrate other chains in the future.

Lava Exchange provides users with a convenient channel for purchasing and withdrawing bitcoins. It not only allows users to directly purchase assets to self-hosted accounts, but also supports withdrawing funds to bank accounts. Essentially, Lava Exchange is a centralized exchange aggregator that can navigate users to the most optimal trading path. In the future, it will integrate more centralized exchanges and aggregate across decentralized exchanges to provide users with a unified exchange aggregator service.

After purchasing or depositing Bitcoin, users can use the Lava loan agreement to borrow US dollars by pledging Bitcoin, with interest rates as low as 4% according to Lava. Users can choose to repay the loan with the appreciated Bitcoin (assuming the price of Bitcoin increases) and receive the remaining amount after the loan matures, or adjust the loan amount before the loan matures to meet their own needs.

Later, users can transfer the borrowed dollars directly from Lava Vault to their bank accounts. In the future, Lava Card will also support users to spend dollars directly from Lava Vault.

The Lava Smart Key is the key to Lava's secure self-custody. It doesn't require mnemonic phrases and supports the creation of a 2-of-2 backup mechanism. One half of the backup is associated with the seed and encrypted storage in iCloud or Google Drive, while the other half is bound to an encrypted key stored on a private key server, which can only be authenticated through a user-defined 4-digit Lava recovery PIN. This backup mechanism not only ensures the security of funds to a large extent but also provides a convenient way to recover assets.

For enterprises, Lava provides an opportunity to earn digital dollars through Bitcoin collateralized loans. And for developers, Lava supports integrating various functions such as Lava Free Pay, Lava Loans Protocol, Lava Exchange, and Lava Smart Key.

It is worth mentioning that, unlike many other crypto startups, LAVA does not intend to launch its own token, and its Series A financing is also conducted in the form of full equity financing.