Catalyst · Investor guide

For investors

Catalyst gives you early-stage token exposure with three layers of protection: your stablecoin principal never leaves the pool, the founder has locked collateral against underperformance, and an adoption oracle vetoes success verdicts based on fake activity.

What you actually get

When you back a startup on Catalyst, you are providing USDx/USDy liquidity to Pool 1. In return:

  • •Your principal stays intact. Because both sides of the pool are stablecoins, there is effectively zero impermanent loss. Whatever USDx + USDy you deposited, you can withdraw.
  • •You earn a token allocation. A pro-rata share of the startup's token (40% of supply is set aside for investors) that unlocks when the cycle resolves.
  • •You get a claim on collateral. If the startup fails its targets, you can file a claim against the founder's locked ETH collateral, pro-rata to your stake.

✅Your downside is capped

The worst outcome for you is: the startup fails, you get your stablecoin principal back, your token allocation is worth less than expected, and the founder's collateral doesn't fully cover the gap. Even in that worst case, your loss is bounded by the difference between the expected token value and zero — you cannot lose your principal.

How to back a startup

  1. 1

    Browse the marketplace

    Open the Catalyst frontend and view the list of startups currently in Funding status. Each card shows the name, description, funding target, commitment deadline, founder collateral ratio, and current funding progress.
  2. 2

    Evaluate the opportunity

    Read the description. Check the collateral ratio — higher ratios are stronger signals. Look at the minimum price target and ask yourself: is this realistic for a product in this category? If there are already some investors, see how much is committed.
  3. 3

    Click Fund Startup

    Open the startup page and click Fund Startup. A modal asks how much you want to contribute, denominated in USDx. The modal shows you the exact token allocation you will receive at cycle end based on your share of total funding.
  4. 4

    Approve and deposit

    If this is your first time, your wallet asks you to approve USDx and USDy spending. After approval, submit the deposit transaction. Your USDx and USDy are added to Pool 1 and your position is recorded on-chain.
  5. 5

    Monitor the Active cycle

    Once the funding target is hit, the cycle starts. Check your dashboard to see the current Pool 2 token price, the latest adoption oracle verdict, and the time remaining on the commitment deadline. You can also reach out to the founder through their own channels.
  6. 6

    Claim at resolution

    When the deadline passes and the evaluator runs, your position shows either Completed or Failed. For Completed, you claim your token allocation alongside your LP withdrawal. For Failed, you still withdraw the LP (principal intact) and file a collateral claim.

Red flags to watch for

  • •Very low collateral. If the founder locked the minimum possible, they have little to lose by walking away. Prefer startups with meaningful collateral relative to funding target.
  • •Impossible minimum price targets. If the founder promises the token will be worth 10x the funding amount at Pool 2 price by deadline, the evaluator will almost certainly mark it Failed and you'll end up claiming collateral.
  • •No description or vague pitch. If you can't tell what the startup does from the on-chain description, you probably shouldn't fund it. The founder's commitment starts with how they describe what they're building.

Withdrawing early

You can withdraw your LP position at any time — you are never locked in. However, early withdrawal forfeits your token allocation and your right to file a collateral claim. This is a deliberate disincentive: if everyone withdrew at the first bad news, the pool would drain and the startup would fail for reasons unrelated to its actual performance.

Early withdrawal only makes sense if you have concrete evidence that something is seriously wrong (e.g. the founder has been dormant for weeks) and you prefer guaranteed principal recovery over the chance of upside.