InfiniFi is a decentralized finance (DeFi) protocol that functions as an on-chain banking system for stablecoins. The platform is designed to provide stablecoin depositors with higher yields by allocating capital into a diversified portfolio of strategies across on-chain DeFi, tokenized private credit, and Real-World Assets (RWAs). Its core model emphasizes generating yield without leverage by transparently matching the liquidity preferences of its depositors with assets of corresponding durations. ^[1]​

Overview

InfiniFi aims to replicate the functions of a traditional bank on the blockchain, with a focus on stablecoins. The protocol's stated goal is to offer users a more efficient and secure method for earning yield on their stablecoin holdings. ^[1] It pools depositor funds and deploys them into a hybrid of strategies that include traditional on-chain DeFi protocols and higher-yielding, less liquid off-chain assets like corporate debt and trade finance, which are brought on-chain as tokenized assets. ^[1]​

The central innovation of the protocol is its capital efficiency model, which dynamically allocates capital based on user choices. Users indicate their liquidity preference by either keeping their deposits liquid or locking them for a set duration. The protocol then matches these liabilities with appropriate assets: funds from liquid deposits are allocated to highly liquid on-chain strategies, while funds from locked deposits are deployed into longer-duration, higher-yield strategies such as a portfolio of RWAs. This structure allows the protocol to offer a base yield for liquid funds and a boosted yield for locked funds, compensating users for providing predictable, long-term capital. ^{[1] [2]}​

Co-founder Kevin Chen described the vision for the project, stating, "InfiniFi is what a bank would look like if built from scratch on-chain." ^[1]​

History and Funding

InfiniFi announced the close of a $6 million seed funding round on February 20, 2024. The round was co-led by Pantera Capital and Framework Ventures. ^{[1] [2]}​

Other participating investors included Fabric Ventures, Comma3 Ventures, Block-0, Solidity Ventures, Fourth Revolution Capital, and NxGen. The round also drew support from several angel investors, including Prabhakar Reddy (Co-founder of FalconX), Michael Safai (Co-founder of Dexterity), 0xMaki (Co-founder of SushiSwap), DCF God, and Brian Pellegrino (Founder of LayerZero). ^{[1] [3] [4]}​

Franklin Bi, a partner at lead investor Pantera Capital, commented on the investment, "The platform's sophisticated capital allocation engine and transparent risk management framework set a new standard for on-chain banking." Vance Spencer, co-founder of Framework Ventures, added, "The biggest business in crypto is US dollar banking... InfiniFi is the ultimate answer to that." ^{[1] [2]}​

Founders

InfiniFi was co-founded by Kevin Chen, Will Huang, and Derek Woloszyn. Prior to co-founding InfiniFi, Kevin Chen worked in investment banking and later as a portfolio manager at a quantitative trading firm before transitioning into the DeFi space. ^[1]​

Technology and Mechanism

InfiniFi's system is structured around an allocation engine that deploys capital based on the collective liquidity preferences of its users. The protocol's Total Value Locked (TVL) was reported to be approximately 35.56 million in liquid deposits and $136.36 million in locked deposits. ^{[1] [5]}​

User Experience

The process for a user to interact with the protocol follows a distinct set of steps:

1. Deposit: A user deposits an approved stablecoin, such as USDC, into the InfiniFi protocol.

2. Mint iUSD: Upon deposit, the protocol mints iUSD, a yield-bearing token that represents the depositor's share of the protocol's total capital pool.

3. Choose Mode: The user selects one of two options for their iUSD holdings:

   • Stake (Liquid): The user stakes their iUSD, which remains fully liquid and can be withdrawn at any time. This option earns a base yield, projected by the protocol to be up to 8% APY.
   • Lock (Higher Yield): The user locks their iUSD for a predetermined duration. By providing long-term, predictable capital, the user receives a boosted share of the protocol's total yield, projected to be up to 12% APY.

4. Earn Yield: The protocol's allocation engine deploys the pooled capital, and the generated yield is distributed to all iUSD holders. ^[1]

iUSD Token

The iUSD token is the core component of the InfiniFi ecosystem. It is an ERC-20 token that functions as a receipt for deposits. Key characteristics include:

• Type: A rebasing, yield-bearing token.
• Mechanism: The quantity of iUSD in a holder's wallet automatically increases as the protocol accrues yield. It is not designed as a stablecoin pegged to $1.00; rather, it is a token representing a growing claim on the underlying asset pool.
• On-chain Data: The token's market capitalization reflects the total value of stablecoins deposited in the protocol and can be tracked on data aggregators. ^{[1] [6]}

Yield Generation Strategy

InfiniFi employs a hybrid model to source its yield, aiming to diversify its revenue streams and reduce reliance on any single sector of the DeFi market. The sources include:

• On-chain DeFi: Capital from liquid deposits is typically deployed in established, overcollateralized lending markets like Aave and Compound, as well as in liquid staking derivatives and structured products.
• Tokenized Private Credit & RWAs: A significant portion of the capital from locked deposits is allocated to higher-yielding, less liquid, off-chain credit opportunities. These can include assets such as corporate debt or trade finance that are structured and brought on-chain. ^{[1] [7]}

Security

InfiniFi places a strong emphasis on security and risk management, which is critical for its model that involves both liquid on-chain and illiquid off-chain assets. ^[1]​

Formal Verification

The protocol's smart contracts underwent formal verification by the security firm Certora. Formal verification is a process used to mathematically prove the correctness of code, offering a higher degree of security assurance than standard audits alone. ^[1]​

The verification engagement specifically targeted the logic for Fair Redemptions. The primary objective was to prove that the redemption mechanism is fair to all users and robust under various market conditions. This ensures that a few early redeemers cannot extract value at the expense of remaining depositors, a key risk when the protocol's underlying assets may be illiquid. The verification helps guarantee the protocol's solvency and fairness, especially during periods of high withdrawal demand. ^[8]​