- Multicoin Capital and Pantera Capital co-led a $3 million raise for a Solana-based DeFi margin protocol
- The protocol attempts to provide an “institutional quality margin” to institutional partners and commercial companies
A Solana-based protocol has lured two major crypto investment firms into 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 of 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 in a development network (DevNet) while supporting institutions and partner integrations as per the release.
Although still in its infancy, the protocol’s DevNet is expected to launch by the first quarter of this year with the aim of fleshing out its cross-protocol interoperable offering. Marginfi aims to bring “institutional quality” margin trading to institutional partners and trading firms interacting within the Solana ecosystem.
Margin trading refers to the act of borrowing money to buy financial assets. Traders who use margin attempt to gain leverage and exposure to assets in a more capital-efficient manner.
Marginfi should develop its protocol to facilitate the management of traders’ open positions, margin trading, on different DeFi (decentralized finance) protocols through a single dashboard.
“In 2021, we saw an explosion of innovative financial products emerge through DeFi,” said Edgar Pavlovsky, founder of Mrgn Labs – Marginfi’s core contributing team.
“The problem is that 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 in Drift with a short options position in Zeta and a parimutual position in Hxro Network, Mrgn Labs said.
“This approach provides an enhanced risk framework to scale quickly with exposure to underlying trading protocols,” said MacBrennan Peet, Head of Growth at Mrgn Labs. “Marginfi is a way for trading firms to globalize on-chain positions and efficiently execute arbitrage through a single account.”
Mrgn Labs said it is focused on whitelisting new institutions with the aim of moving $1 billion through the protocol by the end of the year and plans to launch several merchant-focused initiatives in the run-up. from its early DevNet days.
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