'PayPal for Defi' Startup Kima Secures $1.7 Million Pre-Seed Funding for P2P Money Transfer and Payment Protocol

In a bid to transform the financial settlement layer of transactions, Kima, a peer-to-peer money transfer and payment protocol, has launched its Software Development Kit (SDK). Distinguishing itself from the convention, Kima bypasses the use of smart contracts, choosing to base its protocol on direct money transfers via blockchain addresses and bank accounts. This is a calculated strategy aimed at addressing technical dependencies and vulnerabilities while promoting seamless integration with both blockchains and traditional financial institutions that are incompatible with smart contracts.

This announcement comes hot on the heels of Kima joining the FinSec Innovation Lab, a collaborative initiative between Mastercard and Enel X aimed at fostering projects focused on financial technology and cybersecurity advancements.

While smart contracts have gained traction in improving the efficiency of the blockchain industry, they fall short in addressing some key challenges. For instance, 2022 alone saw an alarming $3.1 billion stolen due to vulnerabilities in smart contracts. Furthermore, smart contracts have done little to spur the adoption of Web3, due to their lack of support for easy cross-network transfers or transactions, including those on the Bitcoin blockchain.

In response to these issues, Kima has used its $1.7 million pre-seed funding to launch an SDK tailored for dApp developers, institutional Web3 builders, Web 2.0 apps, and fintech companies. This move is aimed at encouraging traditional institutions to start bridging the gap between crypto and fiat transactions.

Kima’s protocol, known as the Smart Transaction primitive, stands apart from other crypto bridges. It is not bound to specific exchanges or networks, a design choice that minimizes trust assumptions and maximizes efficiency. This approach also circumvents the security and counterparty risks associated with smart contracts.

By using funds from anywhere, Kima streamlines common financial services like money transfers, transactions, and escrow services between different ecosystems, including blockchains and bank accounts. To ensure settlement security, Kima employs several key strategies. These include using externally owned accounts (EOAs) as native blockchain accounts to eliminate the need for smart contracts on every blockchain, which enhances security. Transactions are controlled using Threshold Signature Scheme (TSS) and Intel SGX technology, ensuring secure key sharing among blockchain validators. In addition, Kima's Liquidity Management (LiMa) algorithm effectively manages supply and demand across all ecosystems while maintaining system-wide equilibrium.

As the newest entrant to the FinSec Innovation Lab, Kima gains critical support from Mastercard and Enel X to expand its beta program, launch pilot projects, and develop progressive technology. Eitan Katz, CEO of Kima, views this partnership as an opportunity to create "unprecedented levels of efficiency and security in the financial technology space." Katz expressed his excitement at the launch of Kima's SDK, hailing it as a step towards making cross-ecosystem financial interactions seamless, secure, and transparent.

Kima's entry into the FinSec Innovation Lab was also welcomed by Sidney Gottesman, CEO of the lab, noting that digital assets are a key focus area for the lab, making Kima a natural fit.

The FinSec Innovation Lab plays a key role in providing startups with access to commercial and technological support. This includes access to global experts, a wide network of alliance partners, and assistance in obtaining government grants. Moreover, startups benefit from access to infrastructure, solution architecture, and proof of concept completion services.