Strips Finance Announces $8.5M Token Round Led By Multicoin Capital to Launch Interest Rate Swaps Perpetuals
Strips Aims To Be The World’s Largest Fixed-Income Trading Platform in DeFi
Strips Finance, the first interest rate swap exchange powered by a virtual automated market maker (vAMM), today announced the project has raised $8.5M in a token round led by Multicoin Ventures with participation from Defiance Capital, Fabric Ventures and Morningstar Capital. This round follows a $2.5M series seed round, bringing the project’s total funding to date to $11M. The new funds will be used to expand the team and launch a suite of new fixed income products that will be built on top of its interest rate swaps. Strips Finance is planning to launch on Arbitrum and BSC.
Other investors participating in the round also include Apollo Capital, Digital Strategies, Efficient Frontiers, FollowTheSeed, LD Capital, Metacartel Ventures, Okex Blockdream Ventures, Rarestone Capital, SevenX, Kronos and Woo Network.
In finance, interest rate swaps account for $6.5 trillion of daily traded volume, which represents over 80% of the world’s total derivatives volume. Interest rates touch nearly every financial product in traditional markets, but unlike traditional finance, the tools to wield them in decentralised finance (DeFi) have yet to be developed or meaningfully deployed in the market.
Strips Finance aims to solve this by allowing traders to easily trade interest rates using a derivative instrument called an interest rate swap. Interest rate swaps are derivative instruments that pay the difference between a floating rate and a fixed rate. Because swaps require little capital upfront, they give traders an efficient way to speculate on movements in interest rates. Interest rate swaps are a tool for traders to express directional views in both bull and bear markets. Strips Finance gives traders the ability to easily trade interest rates in DeFi for the first time.
“While there is a burgeoning market in DeFi for variable lending and borrowing protocols, with over $200bn in TVL, the fixed-rate market is still nascent. We aim to build the world’s largest fixed-income trading platform. In order to get there, we first have to build a robust interest rate swap exchange to serve as the foundation for new fixed income products,” said Ming Wu, founder, Strips Finance.
One of the key problems with other fixed-rate protocols is that they are inherently capital inefficient. By using derivatives rather than tokens as the tradable instrument, we solved a lot of the underlying problems plaguing the current fixed-rate protocols in DeFi — namely, ease of use, capital efficiency and flexibility.
Strips Finance uses a virtual automated market maker (vAMM) model for liquidity, which is an adaptation of the constant product function popularised by Uniswap. On top of the exchange, the project is also actively building out products for interest rate trading, yield hedging and leveraged yield farming.
“Interest rate markets are still one of the largest unrealized opportunities in DeFi. Right now, markets are extremely volatile because traders don’t have a way to effectively hedge out variable-rate volatility. Strips Finance is building a complete toolkit that gives traders the ability to express their views with a number of easy to use, structured products,” said Tushar Jain, Managing Partner, Multicoin Capital.
In order to be successful in this space, you have to be multidisciplinary and understand the inner workings of financial markets at their core. Strips Finance is an all-star team of builders and experts who have each individually reached the pinnacle of their respective fields.
Strips Finance’s team comes from a background in portfolio management and high-frequency trading. The project’s founders previously worked at Goldman Sachs, BlackRock, GIC. Strips’s CTO was previously a technical product lead at a digital bank, and also taught blockchain development. The core team has a well-rounded background ranging from traditional portfolio investing, crypto trading and blockchain development.
Strips Finance is currently hiring for several roles. Interested applicants can email their resume and cover letters to firstname.lastname@example.org.
About Multicoin Capital
Multicoin Capital is a thesis-driven cryptofund that invests in cryptocurrencies, tokens, and blockchain companies. Blockchain technologies will create trillions of dollars of value over the next decade. But investing in tokens is fundamentally different than investing in companies. New tools, heuristics, and security measures are required to responsibly invest in this ecosystem. We believe in making decisions based solely on first principles and deep understanding of technology. We rigorously research blockchain protocols, teams, and market opportunities to deliver venture capital economics with public market liquidity. For more information, please visit https://multicoin.capital/.