Valence: Unlocking crypto institutional markets

Interop Ventures recently invested in Timewave, the company building Valence. Led by Max Einhorn, Valence offers a set of tools for protocols and DAOs to better manage their treasuries and lend their assets.

Protocols can leverage their treasury assets by lending them to other protocols such as chains, AVSs or Defi apps–DAO-to-DAO or DAO-to-Dapp lending is a good way to look at it. For examaple, a DAO or Layer-1 can strategically lend assets to support an AMM or lending market liquidity pool.

Notably, the Cosmos Hub unilaterally allocated 450,000 ATOM and 600,000 ATOM to the ATOM:stATOM and ATOM:stkATOM pools on Astroport. It also entered positions of 900,000 ATOM to support the ATOM:stATOM pool on Osmosis.

Other, more complex deals exist where two protocols bilaterally provide liquidity to a DEX. Neutron and Apollo DAO both contributed $500,000 of their native tokens to support the NTRN:APOLLO pool on Astroport, as one example.

The difficulty with POL lending is that there have not been great tools to manage the deals in a trust-minimized and programmatic way. Most deals are done manually using multi-sigs, which, in addition to being cumbersome, present risks and lack the ability for rules-based parameters.

Valence’s Covenant protocol solves this by allowing any protocol, on any chain, to enter into economic relationships with one another. On the surface, this enables safer, more efficient POL deals like the ones mentioned above. At the outset, Covenants enable POL debt markets where protocols compete for the best lending rates and borrowers have clear, predictable terms on how much liquidity they will receive over known timeframes.

In short, Valence is to liquidity what EigenLayer is to security. Liquid Restaking Protocols compete not only for security but on their ability to efficiently deploy liquidity in consumer chains. This further enhances alignment between crypto-native institutions and applications, fostering stronger decentralized ecosystems.

Covenants is but one part of Valence–their Rebalancer product smart balance sheet and treasury management for protocols. Overall, Valence enables more efficient, transparent and useful treasury management, unlocking crypto institutional debt

I’m excited to be an early supporter of the team and its vision and look forward to writing more about Valence as they continue to build.