Bitcoin derivatives startup Hedgy has raised $1.2m in new seed funding from a group of 10 investors that includes Draper Fisher Jurvetson partner Tim Draper, Salesforce CEO Marc Benioff and Sand Hill Ventures.
In conjunction with the announcement, Hedgy has also launched a new derivatives product aimed at commercial bitcoin miners.
Miners that use the derivative can effectively lock in a future price at which they can sell bitcoins, using a smart contract to settle the transaction on the bitcoin blockchain.
Drawing price metrics from TradeBlock, the new product is the result of a collaboration with distributed US bitcoin mining company MegaBigPower (MBP) and London-based Crypto Facilities, a bitcoin derivatives exchange founded by former executives from Goldman Sachs and BNP Paribas.
MegaBigPower is the first US mine to utilize the derivative. Crypto Facilities buys bitcoins mined by MBP, which are then sold by way of two-of-three multisig contracts.
In interview, Hedgy CEO Matt Slater said that product helps miners address the issue of price volatility as they look to sell coins on the market.
He said his startup has been working with MBP founder Dave Carlson for months on the derivative – Carlson also serves as an advisor to Hedgy – and explained that the solution can help other industrial mining companies better manage their financial risks.
Slater told CoinDesk:
“Our core focus right now is solving this problem for miners. And Dave, being one of those most well respected and biggest miners in the space, you know, if we can solve it for Dave we can solve it for other miners as well.”
Slater added that Hedgy has fielded interest from other bitcoin miners, as well as companies in the broader digital currency space, about the use of smart contracts to alleviate concerns about price fluctuations.
When reached for comment, Tim Draper praised the Hedgy the team and predicted a significant role for blockchain-powered smart contracts to come.
“Hedgy is awesome. Great team, exciting mission. Smart contracts are going to be fundamental to contracts of any kind in the future, and bitcoin makes it all possible,” he said.
The new funding includes a previously disclosed $764,000 raised by the Boost VC Tribe 4 graduate.
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