OpenTrade Raises Over $1.5M for Building Crypto Structured Financial Products

OpenTrade, provider of on-chain structured financial products for Web3 treasuries and businesses, has raised just over $1.5 million in a funding round led by crypto-native venture capital firm Sino Global Capital.

Other backers in the funding round included Circle Ventures, Kronos Research, Kyber Ventures, Polygon Ventures, and Outlier Ventures. The capital will help OpenTrade scale its operations ahead of the launch in the second half of this year.

The initial products will include liquidity pools for U.S. Treasury bills, investment-grade commercial paper and investment-grade supply chain financing. Tokenized access to traditional finance products, such as the short-term U.S. debt obligations backed by the government, have grown in popularity as a way to tap into the crypto market while managing volatility amid a protracted bear market.

The decentralized finance (DeFi) protocol platform is built on Circle’s DeFi and payments infrastructure and runs on Polygon and Ethereum.

How it works

Founded earlier this year, London and Palo Alto-based OpenTrade utilizes a global network of financial institutions and business-to-business (B2B) networks to create on-chain liquidity pools with specific investment criteria, underlying assets and target yields, according to the company website. Assets backing each pool are held in a bankruptcy remote structure by a regulated custodian in segregated accounts to help mitigate risks.

Users can deposit USDC stablecoins or euro coin (EUROC) from their wallets into the OpenTrade liquidity pools. In exchange, the user receives an ERC-20 token representing a pro rata claim on the net asset value (NAV) of the pool and its underlying assets. To withdraw, a user can redeem the liquidity pool tokens for the equivalent amount of USDC or EUROC, an amount that will include a pro rata share of the principal and accrued interest.

Financial backing

The OpenTrade founding team includes CEO Dave Sutter and Chief Commercial Officer Jeff Handler, who previously worked at Centre, the consortium co-founded by Circle and Coinbase to govern USDC. The team also includes Michele Bisceglia, who was previously a partner at advisory and asset management firm AgFe.

As part of OpenTrade’s formation, Bisceglia and adviser Steve White launched Five Sigma, a dedicated structured finance and investment advisory firm that was spun out of AGFE to manage OpenTrade’s off-chain operations.

Five Sigma currently has over $700 million in assets under management and advisory.

Read more: Crypto Trading Legend’s Next Move Is Bringing U.S. Treasurys to Blockchains, With Plans for Corporate Bonds, Too