Ethereum based Opyn, an options issuance platform, has secured $2.16 million in capital via a round led by Dragonfly Capital, a cross-border crypto-asset investment firm.
Other investors in Opyn’s latest round included 1kx, an early-stage token fund focused on remittances, computation, storage, prediction, and the power sector; A. Capital, an early-stage tech firm investor; Version One Ventures, another company investing in early-stage ventures; and Uncorrelated Ventures, a company investing in infrastructure software.
Balaji Srinivasan, the former CTO of Coinbase and general partner at Andreessen Horowitz, and Robert Leshner, the CEO at the company developing Compound, a leading DeFi protocol, made contributors as well.
The decentralized finance (DeFi) ecosystem is currently valued at over $1.5 billion according to DeFi Pulse. Compound recently surpassed MakerDAO to become the largest DeFi protocol. There’s currently $585 million in value locked into Compound and about $473 million in MakerDAO.
The significant increase in demand for DeFi has created new requirements such as better risk management tools.
Tom Schmidt, partner at Dragonfly Capital, stated:
“Risk is endemic to DeFi, from technical risk of smart contract hacks, to volatility risk in the assets that act as collateral. Everyone knows that DeFi is still in its infancy, and for it to make it to the next stage of adoption, it needs a way for users to hedge against these risks.”
Opyn offers a two-sided marketplace that’s somewhat similar or tries to mimic a traditional insurance market.
Users looking to safeguard their deposits on DeFi protocols such as Compound may acquire options contracts that have an underlying asset for covering the value of their deposited funds. If the protocol ever becomes insolvent, then they will be able to exercise these options, in order to recover their lost deposits.
The marketplace also includes options contract creators who lock up Ethereum (ETH) as collateral and then issue options that are represented by “oTokens,” which may be sold on non-custodial exchanges like Uniswap to people buying insurance.
Zubin Koticha, CEO and co-founder at Opyn, remarked:
“As DeFi continues to grow at its current rate, a thriving options ecosystem will be an important next step for its maturation and eventual mass adoption,”
Launched in February 2020, Opyn has about $1.4 million in total value locked in its contracts, according to DeFi Pulse data.
Its daily trading volume has been increasing steadily, with 476 different addresses holding oTokens at the time of writing.
The Opyn team said it will use the capital acquired to enhance security measures and hire more staff members.
