Decentralized crypto derivatives exchange SynFutures has successfully raised $22 million in a Series B funding round. The funding round was led by Pantera Capital, with participation from Susquehanna International Group (SIG) and HashKey Capital. This notable investment comes at a time when the broader crypto market is experiencing a slowdown in venture investments.
Key Takeaway
SynFutures, a decentralized crypto derivatives exchange, has raised $22 million in a Series B funding round led by Pantera Capital. The company aims to enhance capital efficiency in DeFi by introducing on-chain order book functionalities. SynFutures’ automated market maker (AMM) called Oyster utilizes algorithmic robots and smart contracts to streamline crypto trading. The platform targets high net-worth individuals and small institutions, offering them a transparent and decentralized trading experience.
A New Approach to Crypto Trading
SynFutures is launching its proprietary automated market maker (AMM) called Oyster in conjunction with the funding round. The AMM leverages algorithmic robots to facilitate the buying and selling of crypto assets, making it more accessible for traders. Unlike traditional order books, which are commonly used for trading, AMMs like Oyster rely on smart contracts to execute actions based on predefined conditions. These contracts handle crucial tasks such as pricing, settlements, and profit and loss analysis.
One of the main challenges that SynFutures aims to address is capital efficiency in the decentralized finance (DeFi) space. While AMMs have become the cornerstone of DeFi, SynFutures is striving to incorporate on-chain order book functionalities typically associated with traditional finance.
Targeting High Net-Worth Individuals and Small Institutions
SynFutures primarily targets high net-worth individuals and small institutions as its user base. The company has accumulated over 100,000 traders since its inception, with trading volumes surpassing $21 billion since October 2021. Despite handling significant amounts of money, SynFutures has managed to maintain a lean team of around 20 employees, thanks to its efficient use of smart contracts.
The Demand for Decentralization
SynFutures is capitalizing on the growing demand for transparent and decentralized forms of crypto trading. All transactions on the platform occur on-chain, and users’ funds are stored in self-custodial wallets. This approach ensures transparency, as users can easily track the performance of their funds and verify trading prices and liquidity.
CEO Rachel Lin predicts another DeFi boom in the next two years as underlying blockchain technology continues to mature. While traditional financial institutions are experimenting with blockchain and digital assets, they often face internal challenges and bureaucratic hurdles. Lin believes that SynFutures and other DeFi platforms have the potential to challenge centralized exchanges and even traditional financial giants like JPMorgan.
Challenges in Security and Regulation
Similar to centralized finance, security is a major concern in DeFi. The vulnerability of smart contracts to hacking attempts poses risks for users. Regulatory uncertainty is another pressing issue for DeFi platforms. While regulators have focused on centralized crypto services thus far, there is still a lack of clear guidelines on compliance in the DeFi space. Some approaches involve implementing know-your-customer (KYC) processes for institutions or introducing KYC layers through gateways like wallets and exchanges.
