Stabledash Live · May 21 · 22 min

Inside Cap with DeFi Dave: $400M in 9 Months, Onchain Credit, and Why Protocols Beat Promises

With Dave Liebowitz

Key takeaways

Cap raised an $11M seed round led by Franklin Templeton and, according to Dave Liebowitz, passed $400M in TVL nine months after its August launch.
Borrowers such as Susquehanna pay underwriters fees of 2-4%, and the underwriters take the penalty if something goes wrong, which Liebowitz says protects depositors' principal.
Liebowitz says stcUSD yield runs between 5-7% APY, and he expects Cap to move into LBOs, supply chain finance and film financing.

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Summary

Cap's head of growth explains how a credit protocol backed by underwriters pays a 5-7% yield to stablecoin depositors and why he thinks institutions will follow.

Cap, a stablecoin credit protocol that raised an $11M seed round led by Franklin Templeton, has passed $400M in total value locked nine months after launching in August, according to head of growth Dave Liebowitz. He also says the protocol has more than $150M in delegations and vouchers.

Three sides of the market

Dave Liebowitz describes Cap as the first autonomous allocation stablecoin, where "instead of relying on humans, you rely on markets to make the decisions." He calls it a credit platform with principal protection on all deposits: if a loan goes bad, the underwriter takes the responsibility and is penalized, so depositors are protected from downside risk.

On the borrower side, he says Susquehanna is currently borrowing from the protocol. Borrowers pay fees to underwriters of between 2 and 4%. Liebowitz says about half of Cap's USDC is being borrowed for various strategies, and the rest sits in Morpho earning the base rate.

“We rely on co we we rely on protocols, not promises. We rely on code much more than others.”

Dave Liebowitz

Yield and distribution

Liebowitz says the staked token, stcUSD, is "always between, like, 5-7% APY." Distribution is widening too: any WisdomTree customer, whether an institution or an individual, can access Cap's yield through the WTGXX ticker. He says tokenized money market funds have grown over 3000% in the past few years.

Institutions moving onchain

Dave Liebowitz points to JPMorgan, which he says just announced a tokenized money market fund and has tokenized deposits of over a trillion dollars used for interbank transfers. His thesis is that "the entire world will come on chain." He expects the industry to split between efficient finance, where institutions use the technology to make their core business more efficient, and alternative finance.

Looking ahead, he expects Cap to be used in the productive economy, naming LBOs, supply chain finance and film financing. The company has also started a podcast, hosted by Liebowitz, that highlights its partners.

Dave Liebowitz presents Cap as a protocol where code and underwriter penalties take the place of trust: "we rely on protocols, not promises." He calls it "the next evolution of stablecoins" and says it is ready for institutions.

Cap, WisdomTree, JPMorgan, and BlackRock come up most.

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