"I would call this the 'moving fast as hell' era," Robert Leshner said of decentralized finance (DeFi) right now.
CoinDesk spoke to Leshner, founder of the Ethereum-based money market Compound Labs, and Tarun Chitra, of crypto financial modeler Gauntlet Network, about the new fund they are running together.
It's the second fund created by Leshner's firm, Robot Ventures, and it has secured $4 million in funding, led by Galaxy Digital with additional participation by Coinbase co-founder Fred Ehrsam's Paradigm.
Scout funds act as seed investors but with ties to institutional funds, helping the larger entities get an early read on opportunities for later rounds. Robot Ventures was first announced in April 2019.
"It's quite hard to understand which ones make sense and don't make sense," Chitra said, because it can be difficult for those who aren't in the trenches to assess the quality of a project's relevance. "We can serve as the bridge."
Chitra and Leshner bring complementary skill sets to the space. Leshner is the one who set up a DeFi company and brought it to a market-leading position. Tarun, as Leshner put it, "is probably the lead quant within DeFi and has done a lot of the structuring of token distributions and economic analysis for probably every project you've heard of."
Quipped Leshner: "He's the brains, I'm the brawn."
Chitra said DeFi today has a clear advantage over traditional high-end trading desks that won't even consider creating a derivative for less than millions of dollars. DeFi is cranking out new derivatives every day, completely upending the model. This is where big investors want to get some kind of exposure.
"I think it feels a little bit like when traditional markets turned electronic in the '90s, when people were able to, like, start their own exchange in their backyard, and those over time congealed into the current modern trading ecosystem," Chitra said. "I think [DeFi] will converge to a happy medium that replaces a lot of traditional investment banking functions."
Other large operations might need to get in soon or miss out on an unusual moment.
"When I started Compound there was like three things that would call themselves DeFi projects," Leshner said. "This is the lightspeed era of DeFi, where one week feels like one year. The pace of people trying new things is the highest it's ever been."
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