Rift Finance, a cryptocurrency startup focused on liquidity for DAOs, has raised $18 million in funding led by Pantera Capital, Blockworks reports. Other investors, including Coinbase Ventures and Jump Capital, also participated.

Rift Finance's Co-founders Austin King and Tyler Tarsi say many decentralized autonomous organizations (DAOs) suffer from a lack of deeper liquidity.

This was one of the most obvious pain points in DeFi and a great way to add value early on and support the rest of the ecosystem.

Tarsi added the proceeds will help the startup with building out its team and the DAO community, as well as launching its token liquidity infrastructure across layer-1 blockchain networks.

Tokenomics is playing a vital role in the life of every "true DAO" as these decentralized entities are strongly dependent on decisions made by voting with the help of native tokens.

Read also: How DAOs improve community-led initiatives

Apparently, liquidity is playing another key point for DAOs as many projects face a gauntlet of governance due to insufficient trading volumes, which undermines incentives for investors to stay in the organization.

For instance, To The Moon earlier reported that ApeDAO decided to sell 81 BAYC tokens to reimburse community members due to a gap between the APED token price and net asset value of DAO holdings.