Decentralized Forex Is Coming to Terra: Vertex Protocol Raises $8.5M

Decentralized foreign exchange platform Vertex Protocol said Tuesday it raised $8.5 million in seed funding. The round was led by Hack VC, Dexterity Capital, Jane Street, Hudson River Trading and other firms, according to a press release.

The exchange offers decentralized finance (DeFi) services via Terra’s stablecoins. Conor McNamee, Vertex’s operations manager, said the protocol’s goal is to expand DeFi lending and other products beyond U.S. dollar-pegged stablecoins, which make up 99.5% of all stablecoins.

“A lot of people that are not from America, they want to probably use their local currency, right?” McNamee told CoinDesk in a phone interview. “Especially for firms or trading funds, or neobanks that are offering high interest savings accounts to users on top of DeFi, it's pretty risky not to hedge your [foreign exchange] exposure.”

While the most popular stablecoin in the ecosystem is terraUSD (UST), the chain also hosts stablecoins for Chinese yuan, euro, British pound and more.

Vertex allows users to trade, pool, borrow and lend these foreign cryptocurrencies. They can purchase perpetual swaps to hedge currency risk, making the market more accessible, said the press release.

Vertex is not the first DeFi FX platform. Synthetix, an Ethereum-based protocol that provides synthetic digital asset lending and trading, offers the euro-linked token synth sEUR (SEUR). However, McNamee said Terra’s low fees and transaction speed are more attractive for traders.

Vertex recently completed its Testnet phase with over 75,000 users. McNamee said his biggest insight from the phase was to make the user experience “less intimidating.”

A Testnet user named “Liquidity King” told CoinDesk via Telegram that they hope Vertex can “improve the [user interface], offering better charting options for the currency pairs as well as offering more pairs.”

“We want to bring sophisticated usability and tools to users so, like, trading charts, like limit orders, all this kind of stuff to users,” said McNamee. “We want anyone to be able to trade.”

According to McNamee, Vertex plans to use the funding to build out the team, scale the protocol, and develop a strong backend ahead of its launch in summer 2022. McNamee did not disclose a specific month.

CORRECTION (April 26, 2022, 13:15 UTC): Corrects Conor McNamee's title, adds additional context.