Element Year in Review: 2021
2021 was spectacular. In only 12 months, we launched on mainnet, introduced more than seven different assets together with multiple terms…
2021 was spectacular. In only 12 months, we launched on mainnet, introduced more than seven different assets together with multiple terms, and raised $32M at a $320M valuation in our Series A fundraising round. We also rolled out our Treasury Management initiative, open-sourced our Governance System, and brought in a team of engineering, design, community, research, legal and regulatory veterans to build Element into the remarkable company that it is today, and the decentralized protocol it will be tomorrow.
Above all, we’re building new DeFi, Governance, and Regulatory primitives under the conviction that what we’re doing is bigger than us. We will continue to push critical innovations taking into consideration that our decisions and work will affect the web3 space as a whole. Ultimately, we will continue expanding on our additive and collaborative approach, and do everything in our power to help coordinate progress for the entire space.
Element Finance Protocol Launch
I’m so proud of this team and all that we’ve accomplished together. The first two quarters of the year were intense, and it took the best out of our team to ship on time. We announced our seed funding round in March, launched our testnet on May 8, and launched Element on the Ethereum mainnet on June 30, 2021.
While building the initial version of Element Finance, we had committed to May 7 for our testnet release. We realized we were behind but wanted to be a team that stuck to our commitments and shipped. So some of us decided to lock up in a house in Mexico City without leaving until the work was done. We rented a small house far from distractions and got on a 2-week non-stop coding frenzy. We pushed to the finish line together, releasing in time. It was intense, fun, and, above all, bonding. We felt accountable to our community and were willing to do anything possible to get us over the finish line.
We pushed to the finish line together, releasing in time. It was intense, fun, and, above all, bonding. We felt accountable to our community and were willing to do anything possible to get us over the finish line
This was one of the most enjoyable moments I had at Element as a founder. I got to roll up my sleeves and get involved in all aspects of the business, including submitting over 20 PRs to the front end myself.
This early experience set us on the path we continue to follow: a team that’s entrepreneurial in spirit, which can wear many hats and is committed to excellence.
Assets Rollout and Products Built on top of Element
Assets Rollout
We launched over seven assets, including WBTC, USDC, DAI, stETH, LUSD, alUSD, MIM, crv3crypto, and eursCRV. We started by rolling out three-month terms and eventually iterated and began rolling out six-month terms. A few of these decisions were made with the same collaborative approach we take on everything at Element. We engaged with our community members and users that look to diversify into high yield fixed rates in a decentralized fashion. We relied on those conversations to inform our decision-making.
Below you can see some of Element’s key metrics so far:
- + $220M TVL.
- + $175M total liquidity.
- + $176M trading volume.
- + 23K users.
- Consistently provide the highest fixed-rate yields denominated in USD in the DeFi industry (Up to 13% on USD) without a token or subsidization mechanism.
Products Built on top of Element
We’re excited to see how multiple teams have started developing new products and services on top of our protocol, proving our hypothesis that the Element protocol is a new DeFi building block.
Some highlights of 2021 include:
- A 45-day USDC term launched in collaboration with Pods Finance
The collaboration between Element Finance and Pods Finance enabled the support of Principal Tokens as usable assets for writing European Put Options. We had very good results with this new term and will explore other opportunities in the future.
- Component Finance launched a Yield Token Compounding Tool
The Component Finance team built a Yield Token Compounding tool built on Element Finance. The initial iteration of the tool allows Element users to automate the process of recursively Minting and Selling their Principal Tokens (PTs) into the AMM to increase the overall quantity of their Yield Tokens (YTs), increasing their yield exposure.
Treasury management
We introduced Element’s Treasury Management Initiative in late August. This initiative has the goal of helping DeFi Protocols, DAOs, Funds, and Institutions diversify their treasuries by allowing them to earn fixed rates on their treasury capital (or a portion of it) while maintaining the flexibility to exit their positions if needed.
This initiative has the goal of helping DeFi Protocols, DAOs, Funds, and Institutions diversify their treasuries by allowing them to earn fixed rates on their treasury capital (or a portion of it) while maintaining the flexibility to exit their positions if needed
We’re working with multiple DAO treasuries and others who seek a diversified treasury strategy and a more predictable cash flow that can help them have better financial planning. It’s exciting to see how the first primitives that we’ve built at Element Finance can help other projects thrive by reducing their exposure to financial risk. This has dramatic importance for the growth of DeFi, and we’re thrilled to offer it to the ecosystem.
$32M Series A at a $320M valuation
We raised our $32M Series A at a $320M valuation and announced it from a restaurant in Lisbon during the ETH Lisbon and ETH Liscon events. The raise included not only new and follow-up investors, but, most importantly, some of the most well-respected DeFi builders.
We consider it a privilege to join forces with many of the most visionary, relentless, and hard-working builders in the space. We think that collaboration across projects is critical to moving DeFi forward. And being able to count on these sets of partners to test ideas, iterate on designs, and help drive the vision for new primitives in DeFi will make Element and the whole space more robust.
L2 scaling is coming to Element
Our community had been expecting the Element Finance protocol to integrate a scaling solution that could bring gas costs down, and we heard them. Element will be integrated into the Aztec Network at the beginning of Q1 2022. According to estimations, this integration could bring gas savings ranging from 6x to 40x on average, depending on the specific term and asset.
The integration with Aztec will allow us to avoid liquidity fragmentation because it postpones the necessity of deploying Element Finance on multiple L2 networks. In the meantime, it will bring the benefits of scaling and privacy today while the L2 landscape continues to evolve. Element Finance has always been committed to bringing the virtues of web3 to as many users as possible. This new integration will bring the fixed-rate market to users that were previously priced out of the market due to high gas costs and benefit all users with the strong privacy protections that Aztec’s zk technology offers.
Element Governance Model
At Element Finance, we’re focused on creating new DeFi primitives for industry adoption. But this framework goes beyond DeFi products and permeates everything we design and build. And it’s the same approach we took while building Element’s Governance Model.
From the start, we envisioned Element as an open, self-sustaining, and community-governed protocol that will hold strong to the principles of decentralization that make DeFi so powerful. That’s why after a few months of introducing the model and covering its Technical Details we decided to open-source the Council Smart Contracts. To go far, we have to go together and want the whole DeFi space to have early access to the new primitives we’ve built.
Element’s Governance Model will be a game-changer. We think that a new era of governance could be ignited by tackling critical challenges such as lack of governance participation, plutarchy, governance attacks, and lack of experimentation that most governance systems face today.
For the best way to get up to speed with how the Element Governance System works and what are the new primitives that it brings to the table, watch our COO, Charles St. Louis, explain it in his presentation during the ETH Liscon conference.
Last week we introduced a new set of primitives that are not covered in the talk: Optimistic Grants & Rewards. I recommend you also dive into those new sets of primitives and keep an eye on all of Element Finance’s channels in the coming days and weeks. As we get ready for the governance launch, we will unveil our core principles and critical aspects of the system while informing the community on the best ways to become a vital member of the Element community.
We Doubled the Team!
Outstanding people build the best projects. After closing our Series A raise, we committed to hiring the best possible candidates to scale our engineering, legal & regulatory, design & branding, research, and community teams. We always considered that the quality of work is not the only factor that accounts for building a solid team, but sharing the same set of values is also as important. We’re excited to have brought Ryan, Duke, Alim, Mihai, Giovanni (a.k.a MazyGio), Patrick, Mudit, Ian, Satyam, Lou, and Gregory to the team and see how they have seamlessly integrated into Element’s culture. We’re excited about hosting a new offsite with all of them to meet in person, as we did this September when the team got together for the first time.
As already mentioned, Element’s framework of creating new primitives goes beyond the DeFi products that our protocol enables. We’ve covered how these primitives look from a Governance perspective and want to cover how we will also tackle the creation of new primitives from a regulatory standpoint.
Gregory C. Lisa, a former Interim Director of Compliance and Enforcement at FinCEN, former CFPB enforcement attorney, and former DOJ organized crime prosecutor, who also worked with many of the top companies in DeFi as a Partner at a global law firm, joined Element as our Chief Legal Officer. But his role will go beyond building the appropriate frameworks for our project. Greg will also be focused on collaborating with other projects in the space and other relevant stakeholders, government representatives, and the overall DeFi community to play a critical role in shaping the industry’s future as a whole. As Greg puts it in his “Why I’m Joining Element Finance” blog post: “We’re going to pioneer new frameworks and bring a unique perspective to this space and think through issues ranging from the role of regulation to governance models to economic issues.” Together with others, we’re going to ultimately shape the future of how DeFi will flourish in the future.
What’s next!
In the following weeks, we will be laser-focused on the roll-out of Element’s Governance System, our most critical step to becoming a fully decentralized protocol. Keep an eye on all of our announcements since they will provide you with valuable information on becoming a vital member of the Element community early on.
But that’s not all. In 2022 we will be unveiling new DeFi and regulatory primitives as well. Expect new functionalities to be added to the core Element protocol to enhance our users’ experience by providing a better and more streamlined experience. Think of automatic rollovers and more. And, as mentioned previously, we’ll also launch on the Aztec Network L2 solution, dramatically reducing gas costs for specific assets and terms. Finally, we will launch the next version of the protocol with innovations that we cannot yet unveil.
We will also be heavily involved in driving the regulatory discussion forward. As DeFi matures, we need to do the same by actively engaging with other projects, developers, academics, the Element community, and government agencies, including regulators, law enforcement, and policymakers. We will help build a regulatory framework for web3.
As we did last year, our team will continue to travel the world to meet the community in real life in many of the events scheduled for 2022. So come and say hi. We will be more than happy to meet in real life.
We’re so proud of this team and this community. It’s amazing to look back at all that they’ve been able to accomplish in 2021. But Element isn’t about looking back; it’s about moving forward. Here’s to a phenomenal and exciting 2022.
Join Our Community! 🧝
We want to hear from you! You can always ask questions in our Discord if you need any help, feedback, or just want to learn more about Element.