- Multicoin Capital and Pantera Capital co-led a $3 million raise for a Solana-based DeFi margin protocol
- The protcol is attempting to bring “institutional grade margining” to institutional partners and trading firms
A Solana-based protocol has lured two major crypto investment firms in a seed funding round based on a vision of simplifying margin trading in DeFi.
According to a press release on Wednesday, Multicoin Capital and Pantera Capital co-led the $3 million round in the Marginfi protocol which also saw participation from Sino Global Capital and Solana Ventures.
Funding will be used to drive community and ecosystem development and launch the protocol into a development network (DevNet) while supporting institutions and partner integrations, per the release.
While still in its infancy, the protocol’s DevNet is slated to launch by the first quarter of this year with an aim to flesh out its interoperable cross-protocol offering. Marginfi is aiming to bring “institutional-grade” margin trading for institutional partners and trading firms interacting within the Solana ecosystem.
Trading margin refers to the act of borrowing money to buy financial assets. Traders who use margin attempt to take on leverage and gain exposure to assets in a more capital-efficient way.
Marginfi is expected to develop its protocol to make it easier for traders, trading margin, to manage open positions across different DeFi (decentralized finance) protocols via a single dashboard.
“In 2021, we saw an explosion of innovative financial products emerge across DeFi,” said Edgar Pavlovsky, founder of Mrgn Labs — the core contributing team of Marginfi.
“The problem is the trading experience is now extremely fragmented across different protocols which destroys capital efficiency and prevents traders from combining their positions into one unified account.”
Marginfi will allow traders to interact with its cross-margining engine through an application programming interface to control multiple derivatives positions. As an example, a trader could combine a long perpetual futures position on Drift with a short options position on Zeta and a parimutuel position on Hxro Network, Mrgn Labs said.
“This approach provides an upgraded risk framework to move quickly with exposure to underlying trading protocols,” said Mrgn Labs’ Head of Growth MacBrennan Peet. “Marginfi is a way for trading firms to globalize on-chain positions and effectively execute arbitrage through a single account.”
Mrgn Labs said it is focused on whitelisting new institutions with the goal of moving $1 billion through the protocol by year’s end and plans on launching several trader-focused initiatives in the lead up to its DevNet debut.
Get the day’s top crypto news and insights delivered to your inbox every evening. Subscribe to Blockworks’ free newsletter now.