Paradigm leads $5 million seed round in crypto credit startup 3Jane

Venture capital firm Paradigm led a $5.2 million seed round in the crypto credit startup 3Jane, which has also emerged from stealth, the companies said Wednesday.

3Jane aims to bring the world of unsecured credit to digital assets.

The company calls its protocol "a peer-to-pool credit-based money market enabling algorithmic, real-time unsecured USDC credit lines to yield farmers, traders, businesses, and AI agents,” according to a statement.

3Jane founder Jacob Chudnovsky told The Block that previous attempts have been made to provide unsecured credit in the digital assets market but have failed due to a lack of “robust” credit underwriting and legal recourse. With underwriting in crypto, the major challenge is that practically all credit-based interactions deal with mortgages, auto loans and credit cards, which exist offchain, said Chudnovsky, adding that he believes 3Jane has solved this dilemma.

In order to do that, the company will evaluate and extend users' credit based on “verifiable financial proofs of credit scores, the full spectrum of DeFi, CEX, bank assets, and cash flows rather than onchain collateral," according to a statement.

“We're trying to build out the first credit-based money market. DEXs have been around, over collateralized lending protocols have been around, staking, re-staking, but the fifth horseman, which is unsecured credit, that entire vertical has been completely underdeveloped,” said Chudnovsky.

3Jane's founder also said he realizes a lot of crypto users enjoy their privacy, or in some cases anonymity, but believes concessions need to be made if DeFi is to scale significantly. “We've leveraged zkTLS, which is a recent technology that has become commercial grade, to trustlessly and in a privacy-preserving way, extract offchain credit data,” said Chudnovsky.

Chudnovsky is also confident that 3Jane will, in the future, be able to help small businesses that choose to utilize AI agents to manage their finances. "That's the first iteration, like an agent operating on behalf of a business that's still primarily run by humans," he said. "The second sort of evolution, which we think is going to take a few more years to come by is, at some point, a lot of these software businesses are going to be completely sort of run by agents, and now you're really underwriting the agent that's operating a business. And that's where we would come in."

According to its statement, 3Jane is hoping to launch its mainnet by the third quarter of this year. The company is initially focused exclusively on the United States, where it says the market for "credit lines, revenue-based loans, merchant cash advances, and trade credit" is worth over $1 trillion.

If 3Jane is successful, Chudnovsky believes his firm will contribute to unlocking DeFi's unrealized potential.

“DeFi growth remains constricted by the absence of a scalable and capital-efficient mechanism for credit creation," 3Jane's statement said. "To truly become the internet-native financial system, free from bank liquidity, a crypto-native credit primitive must emerge.”