Stablecoin donation startup Coala Pay has successfully secured $3.5 million in funding to enhance its platform that connects humanitarian aid organizations with potential donors. This funding round was led by Castle Island Ventures, with participation from Lattice Fund, Factor Capital, and the founders of The Giving Block.
Key Takeaways
Coala Pay raised $3.5 million in a seed funding round.
The platform uses stablecoins to facilitate cross-border donations, reducing transaction fees by up to 25%.
Founder Melyn McKay aims to protect the identities of donors and recipients through smart contracts.
The funding will be used to expand the team with experienced professionals from the UN and U.S. government.
The Role of Stablecoins in Donations
Stablecoins are a type of cryptocurrency designed to maintain a stable value, often pegged to the U.S. dollar. They are increasingly being used for cross-border payments, making them an ideal choice for donations to humanitarian causes. By utilizing stablecoins, Coala Pay can significantly reduce the costs associated with traditional donation methods, allowing more funds to reach those in need.
Melyn McKay, the founder of Coala Pay, emphasizes the importance of this cost-saving measure. “If that were just a business story, it would be an incredible metric. The fact that that metric translates into lives saved and people served is all the more compelling,” she stated.
The Inspiration Behind Coala Pay
McKay’s journey into the world of stablecoins began in 2021 while she was advising the European Union in Myanmar. During her time there, she faced challenges in delivering aid due to restrictions imposed by a military coup. This experience highlighted the need for a secure and efficient way to facilitate donations without compromising the safety of both donors and recipients.
To address this issue, McKay founded Coala Pay, which employs smart contracts to create a secure environment for donations. This innovative approach not only protects the identities of those involved but also ensures that funds are used appropriately.
How Coala Pay Works
Coala Pay operates by vetting both donors and local aid organizations. The platform requires thorough documentation from both parties to verify their legitimacy. Once approved, they can access each other’s documentation as needed.
The process involves:
Verification: Both donors and aid organizations must provide documentation to prove their legitimacy.
Smart Contracts: Instead of traditional contracts, Coala Pay creates smart contracts for stablecoin transactions.
Tracking: A token is generated to store information and track how the donated funds are spent.
Coala Pay generates revenue by charging a service fee for facilitating each smart contract, although McKay has not disclosed specific figures regarding the company’s annual revenue or overall valuation.
Future Plans for Coala Pay
With the recent funding, Coala Pay plans to expand its team by hiring individuals with experience in international aid and government operations. This strategic move aims to enhance the platform’s capabilities and reach, ultimately increasing the impact of donations made through stablecoins.
As the landscape of charitable giving continues to evolve, Coala Pay is poised to play a significant role in transforming how donations are made and received, ensuring that more resources reach those who need them most.