A new derivatives platform announced on Wednesday that it would raise $ 8.5 million to overcome the ecosystem-wide reluctance to use decentralized finance (DeFi) to use more complex financial instruments.

Strips Finance, a fixed income platform, raised the funds through a token sale involving Multicoin Capital, Sequoia Capital India, Fabric Ventures and Morningstar Capital.

Strips plans to launch in November with an initial functionality that enables interest rate swaps (IRSs) via automated market makers (AMMs), the decentralized exchanges through which much of DeFi is processed.

In an interview with CoinDesk, Strips founder Ming Wu described the IRS as a “great tool for both speculators and hedgers” that allows users to switch between more volatile floating rates and safer but lower fixed rates on deposits on protocols like Nerve . to switch .finances.

“This is something we haven’t found in DeFi before, but it’s a huge market in traditional finance – we’re talking about over $ 6.5 trillion traded in the interest rate markets in a single day,” Wu of the IRSs said .

The product will be launched natively on Arbitrum, according to a press release to CoinDesk. Wu said an Arbitrum-native version made more sense than the Ethereum base tier after the team examined various scaling solutions and concluded that optimistic rollups would be the long-term solution for scalability.

The team is also planning a deployment for Binance Smart Chain, which will effectively act as a “backup” in case Arbitrum encounters technical problems during the rollout.

Monkeys can’t count

Regardless of the platform, however, it is unclear how much traffic strips will attract.

One of the strangest puzzles in DeFi is why local traders – often referred to as “monkeys” and known for their love of volatility – have so far avoided the dozen of decentralized derivatives platforms that are available.

Strips already have competing products like BarnBridge and Pendle, but both are around 50th in terms of Total Value Locked (TVL) at around $ 31 million.

However, Wu said the derivatives room still holds great promise.

“I would say the counterpoint is dYdX, this is a decentralized derivatives exchange that has developed extremely well,” he said. “Perpetual Protocol and MCDex are also growing.”

Wu also hopes the Strips architecture, which uses an AMM model, will also help facilitate entry, exit and trading of the products in secondary markets.

“There was no good alternative or derivative for users to trade interest rates as an asset class in and of itself,” he said.

The team is also planning a wider range of products based on the initial rate swap exchange, including a fixed rate product called a perpetual bond – a fixed rate bond that pays the holder a fixed interest rate forever.

Other products in the works include bonds with one-week, one-month and one-year terms as well as interest rate options and leveraged yield farming.

Strips Finance will start a public token sale on October 13, according to its website.

Correction (October 6, 17:24 UTC): Sequoia Capital India, not Sequoia Capital, participated in the financing round.

Source link


Please enter your comment!
Please enter your name here