Paxos Labs raises $12 million, launches Amplify platform for onchain financial products

Paxos Labs, incubated within Paxos last year and focused on helping enterprise clients offer onchain financial products, has raised $12 million in a strategic funding round and launched its flagship product, Amplify.

The round was led by Blockchain Capital, with participation from Robot Ventures, Arthur Hayes' family office Maelstrom, and Uniswap. This was not a traditional fundraising process, Paxos Labs co-founder Bhau Kotecha told The Block. He said Blockchain Capital has been an early investor in Paxos, and when Paxos Labs started building the product layer on top of Paxos infrastructure, the conversation with the venture firm was a natural extension of a thesis they have shared for years. Kotecha declined to share details on the structure of the round, any tranche structure, valuation, or board seats.

"We first backed Paxos because we believed regulated digital asset infrastructure would underpin the next financial system," said Spencer Bogart, general partner at Blockchain Capital. "The infrastructure problem is largely solved. The product problem, what users and platforms actually do with these assets onchain, is the largest open opportunity in fintech today, and this is the team to build it."

The Amplify stack

Paxos Labs’ Amplify is a technical stack designed to help enterprise clients, such as fintech and crypto apps, integrate onchain products and move beyond just holding digital assets. The stack includes three modules: Earn, Borrow, and Mint. These allow clients to offer yield on digital assets, enable crypto-backed lending, and launch branded stablecoins. All modules are live and work through a single integration.

"Amplify is designed for ease of deployment," said Paxos Labs. "A single SDK [software development kit] activates the full suite within any application, with independently configurable parameters across each module, and Paxos Labs managing liquidity, counterparty vetting, and enterprise-led controls behind the scenes."

Paxos Labs’ business model is based on revenue sharing. When a client integrates Amplify and its users engage with yield, borrowing, or branded stablecoins, both the platform and Paxos Labs earn from that activity, Kotecha said. "Adoption on one module compounds the value of the others. It's a model where our partners' growth is our growth," he added.

Paxos Labs said partners such as Aleo, Hyperbeat, and Toku are already live on the platform, noting that the Hyperbeat integration has crossed $510,000 in assets under management since launching last week.

Looking ahead, Paxos Labs plans to scale go-to-market efforts and continue investing in research and development for new products, Kotecha said. He added that the startup will grow its team selectively, focusing on engineering and go-to-market roles.

"The round gives us the runway to not only build the team we need to support the partners coming onto Amplify, but also to continue our R&D efforts into the next generation of digital asset solutions," Kotecha said, declining to disclose the current team size.

Chad Cascarilla, CEO of Paxos, is directly involved with Paxos Labs, Kotecha said. Labs' other co-founders are Chunda McCain and Jun Kim, who previously co-founded Ion Protocol, which later became Nucleus, the structured products desk Paxos Labs acquired last September.

The Funding newsletter:  Stay on top of the latest crypto VC funding and M&A deals, news, and trends with my free bi-monthly newsletter, The Funding. Sign up here!