X-Margin, a company applying privacy-preserving technology to credit and financial market risk, has raised $8 million in a Series A funding round where Coinbase Ventures, HashKey Capital and Spartan Group were major investors. Bixin Ventures, Miranda Ventures (Bybit), Gemini, Primitive Ventures and Kenetic Capital also participated in the funding round along with existing investors Alameda Research Ventures, CMT Digital, CoinShares, DCG, GSR, and Polychain.
The company also received backing by some of the most active trading institutions and users of X-Margin Credit. They included CMS Holdings, Wintermute, MGNR, Dunamis Trading, Pirata Capital, and Kronos Research.
Established in 2019, X-Margin has facilitated more than $220 million of credit extended to institutions trading digital assets through direct lending and DeFi lending platforms. X-Margin’s risk engine currently monitors $2 billion of trading portfolio assets.
“We’re thrilled that such high caliber investors share our vision for transforming credit for institutions trading digital assets,” X-Margin founder and CEO Darshan Vaidya said. “We believe a provably neutral risk engine can scale automated credit extension, giving any lending pool of capital visibility and control over the credit extended.”
X-Margin enables lenders of all sizes to operate a scalable, data-driven lending business. On X-Margin Credit, lenders can connect to creditworthy borrowers, monitor real-time risk and trigger margin calls if the value of a borrower’s net trading position falls outside the agreed parameters. Borrowers can establish their creditworthiness without revealing sensitive portfolio information through X-Margin’s privacy preserving technology and cryptographic proofs.
Credit scoring techniques span a borrower’s exchange, custody and DeFi portfolios. It computes risk without seeing the underlying trading data, so is provably unbiased in evaluating an institutional trading firm’s risk, the company said.
“Facilitating credit in crypto can generate substantially more liquidity and volumes in both CeFi and DeFi trading, and we believe X-Margin’s technology can be a big part of that, making credit risk more transparent and manageable,” Vaidya concluded. “We will continue building out a platform where any pool of capital can access borrowers and easily operate a risk-managed lending operation.”