DeFi Moves Into Real Estate With Tower Fund and Teller Protocol Partnership

The timing for fully transparent DeFi opportunities couldn’t be better, according to Teller CEO Ryan Berkun.

By Ian Allison

Jun 21, 2022 at 4:00 p.m. UTC

Updated Jun 21, 2022 at 4:11 p.m. UTC

Multi-Family Housing — Teller Protocol hopes to bring DeFi to commercial real estate projects such as multifamily buildings. (Dan Reynolds Photography/Getty Images)

Ian Allison

Ian Allison is an award-winning senior reporter at CoinDesk. He holds ETH.

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Teller Protocol, a startup focused on bringing real world assets into decentralized finance (DeFi), is working with real estate veteran Tower Fund Capital.

The partnership allows DeFi liquidity providers to earn interest using USDC stablecoins via Tower Fund Capital, a Securities and Exchange Commission (SEC)-Reg D private lender for real estate investment loans with a $140 million debt fund, the companies said on Tuesday.

It’s just the latest in a series of tie-ups for Teller exploring real world assets and traditional financial services offerings, such as insurance products, to provide DeFi with an alternative to simply earning yield on cryptocurrency.

Teller CEO Ryan Berkun framed the announcement in the context of the recent market turmoil involving over-leveraged, centralized firms whose wheeling and dealing has remained hidden until now.

“I think the timing is great given the unfolding of centralized applications where the transparency was not there,” Berkun said in an interview. “TrueFi, Maple and Goldfinch are also showcasing with Tower Fund these opportunities to be lending into real estate with full transparency, showing that DeFi capital can be allocated to specific opportunities in a way that is no longer a black box.”

Started feeling like a 'no-brainer'

Historically, real estate debt funds, which help connect borrowers with short-term capital for commercial real estate projects such as multifamily buildings, shopping centers, construction loans, etc., have been the preserve of large, specialized investors, and not available to the large and nascent capital pool found in DeFi.

The partnership felt like a good fit, Berkun said, because Tower Fund was interested in exploring the architecture of DeFi’s replenishing pools of capital to create a kind of rolling fund model, alongside the firm’s traditional capital structure.

“It started feeling like a no-brainer, because DeFi lenders want shorter-term deals – 12 or less months,” Berkun said. “A residential loan for a mortgage that's maybe 30 years may not fit the profile of a DeFi lender, but a bridge loan at an interesting high single-digit rate, maybe between 7% and 9%, starts to make sense for a DeFi lender.”

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