Avantis Labs raises $4 million in Seed Funding

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Avantis Labs raises $4 million in Seed Funding

Avantis Labs, a decentralized finance derivatives ecosystem, has raised $4 million through a seed funding round, led by Pantera Capital, it's co-founder and CEO Sehaj Singh told TechCrunch.

Galaxy, Coinbase's Base Ecosystem Fund and Modular Capital all participated in the venture, which included Founders Fund, Galaxy, and Modular Capital. The investment will be utilized to expand Avantis, a constant trade and market-making procedure.

Perpetuals are derivative contracts which allow traders to speculate on the price of an asset without actually owning it, as they have no expiration date and can be held indefinitely.

Many DeFi perpetual protocols focus on trading cryptocurrencies, instead of traditional assets like forex or commodities. In recent months, it has been a surge in demand for more real-world assets to link the traditional financial market to the DeFi world and leveraged trading.

Many RWAs that are available on-chain through DeFi protocols are offered to accredited institutions, not everyday traders. Avantis will allow forex and commodities to 'be hedged and traded on-chain' without the need for tokenization, Singh said.

Oracles from Pyth and Chainlink, which are low-latency, aim to provide traders with better deals across centralized and decentralized financial markets, which is Avantis' underlying trading engine. The platform is based on OP Stack, a network of chains built using the OP Stack, and uses USDC stablecoins as collateral for trades on its protocol.

In the third quarter of this year, Avantis introduced its private testnet phase on Base's blockchain, with initial offerings of bitcoin and ether perpetual trading. It said it plans to launch its mainnet by the first quarter of 2024 and roll out general access afterward.

Its waitlist has around 90,000 applicants, but it started onboarding about 2,500 people this weekend, Singh said. It will not be operating in the United States or any OFAC-sanctioned countries unless it can get approval to operate as an exchange under a CFTC license, he said.

The protocol seeks to provide institutional and retail investors with the ability to trade crypto and RWAs with up to 100x leverage on its decentralized exchange. It aims to provide these traders and liquidity providers with better DeFi derivative trading and market-making infrastructure, as well as a capital-efficient composability that's scalable, the company said in a statement.

Composability is a widely untapped area by orderbook-based derivative protocols because they have minimal trading opportunities for non-crypto asset classes. The DeFi space has been limited to mainly crypto assets.

Avantis will be available on the mainnet with bitcoin and ether and three pairs for foreign exchange, the pound, JPY and the euro. Over time, it will add more cryptocurrencies and 'exotic forex pairs' like INR andUSD, and commodities like gold, silver and crude oil, Singh said.

Avantis has a larger strategy to expand its protocol capabilities beyond perpetual trading, and it plans to begin working on an options engine by mid-nearly next year.

Singh, speaking on condition of anonymity, said: Singh was honoured to be back in India. Beyond that, Avantis' next frontier products can range from 'on-chain casinos' to leverage vaults, he said.