Frontier Finance has raised $2M in pre-seed funding to build a proven stablecoin led by Galaxy Ventures.

Frontier Finance has closed a $2M pre-seed round to build what it calls a “natively verified” stablecoin. Galaxy Ventures led the raise, with First Block Capital and BlackWood also participating.

In the year Funding closed in December 2025 to develop USBD to create a stablecoin designed specifically for institutional players, historically keeping crypto at arm's length.

What scope is actually building.

USBD is designed to perform daily on-chain backup audits, meaning anyone can verify that there are actually backups backing up a stablecoin on any given day. Compare that to Tether, which spent years fielding questions about whether its holdings were fully backed, finally settling with the New York attorney general and agreeing to periodic verifications rather than a full audit.

The stable coin also uses delta neutral strategies for risk management. That is a hedging approach in which the portfolio is structured so that price movements in one direction are offset by positions in the other.

USBD includes a yield companion token called sUSBD designed for investors seeking returns on their stablecoin holdings. The over-holding model means that USBD holds more reserves than the value of the tokens in circulation, providing an extra cushion against market turbulence.

On the compliance front, Frontier is building strict KYC and KYB (Know Your Business) protocols directly into the product. It's built for regulated entities: asset managers, family offices, and institutional distributors who want to check all the boxes before touching anything.

The roadmap and targets

Frontier plans to launch USB D on the Ethereum mainnet in early summer 2026. The group has set a goal of reaching $100M in total locked-in value by the end of 2026.

The growth strategy is focused on private placements targeting asset managers and family offices.

Galaxy Ventures, the investment arm that led the round, has invested in more than 50 crypto projects since 2018.

Why institutions are thinking about stablecoins now

The stablecoin sector is expected to reach a market size of $3 trillion by 2030, with much of the growth expected to come from institutional adoption rather than retail exchanges.

The EU's MCA regulation is already in place, and US lawmakers have been pushing for stable coin-based legislation.

Excess holdings are inherently capital-inefficient. By holding more reserves than necessary, the border provides additional security, but limits the yield it can offer compared to riskier DeFi protocols that operate with poorer margins.