Cypher Raises $2.1M for Traditional Futures Market on Solana

The protocol wants to become an influential outpost for pre-launch price discovery.

Nov 18, 2021 at 2:05 p.m. UTC
Updated Nov 18, 2021 at 3:36 p.m. UTC

Solana’s latest derivatives market is betting “expiratory” futures contracts (aka traditional futures) can make an impact in decentralized finance (DeFi) where the “perpetual” reigns supreme.

Cypher, the upstart protocol, plans to start trading synthetic futures contracts tied to restricted assets like pre-public stocks or upcoming token sales as soon as next month, project developers told CoinDesk.

It raised $2.1 million from crypto venture firms Sino Global, SkyVision and Blockwall. That amounts to 6% of Cypher’s total governance token issuance, project contributors told CoinDesk.

Cypher’s goal is to become an influential outpost for price discovery. Letting investors trade contracts that capture what they believe a soon-to-launch token is worth can help that token’s project better set launch price, they said. They’re already in talks with some protocols.

Beyond just tokens and stocks, “we’re looking at things like NFT futures, DeFi rate derivatives – so a lot of stuff where having that set expiration date can really help you express a more nuanced view on the market,” James, a project contributor and globetrotting expat, said.

Having an expiration date on futures contracts is commonplace in traditional finance (TradFi), but not so in crypto. Degens have favored perpetuals ever since BitMEX introduced the form in 2016; it remains a product seldom found off-chain. That makes Cypher’s vision somewhat of an outlier in DeFi.

But James argued Cypher’s product is “easier” for DeFi newcomers to understand. Plus, he said it fits better with the needs of pre-launch markets. A futures contract on Kraken’s eventual IPO price would expire after the first day of trading concludes. Pyth will supply Cypher’s price feeds.

The developers said they’ve taken steps to avoid getting caught in the legal morass that Mirror, another synthetic futures market in DeFi, faces. It will initially geoblock all U.S. IP addresses.

DISCLOSURE

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Danny is CoinDesk's deputy business editor. He owns BTC, ETH and SOL.