Term Structure, a non-custodial fixed-income protocol that provides peer-to-peer, fixed-rate, and fixed-term borrowing and lending in decentralized finance, has secured initial seed funding of $4.25 million. Cumberland DRW led this round, with participation from Decima Fund, HashKey Capital, Longling Capital, and MZ Web3 Fund. The seed fundraising increases Term Structure’s total funding to north of $8 million.
“Fixed income products are a foundational element of traditional financial market structure, and demand for these products in DeFi markets is an important signal of the increasing maturity in this market sector,” Cumberland DRW said in a statement. “Term Structure, which is led by industry veterans, is an exciting investment for us and reflects our commitment to investing in innovative solutions that solve real market needs.”
In TradFi, fixed-income products enable institutions and individuals to predict future cash flows and evaluate the relative value of different investment opportunities. However, such products are currently absent in DeFi. With the Term Structure Protocol, users can use fixed-income products to earn periodic interest to ensure a reliable income stream or secure fixed rates to control funding costs.
Once fundamental fixed-income products are established, they accelerate the full development of sophisticated financial products, including forwards, futures, and options. These tools can be used for hedging, valuation, and pricing financial instruments.
The Term Structure Protocol testnet is live on Ethereum Goerli. This protocol currently has two core markets on its platform. In the primary markets, users can place orders to borrow or lend tokens with fixed interest rates and fixed maturity dates. Once orders are matched, borrowers will receive borrowed tokens and must repay their debts before the maturity date to reclaim their collaterals. Lenders will receive fixed-income tokens, redeemable for principal plus interest upon maturity. In the secondary markets, users can buy and sell fixed-income tokens through the orderbook trading system.
To secure users’ assets, the zkTrue-up scaling solution, a customized ZK Rollup, is in place to achieve data availability and enable users to place and cancel orders without gas fees. Users can also initiate Forced Withdrawal on the zkTrue-up contract to directly withdraw funds in case of censorship or any issues. If the withdrawal request is not fulfilled, users can activate the Evacuation Mode and perform the evacuation on the L1 contract to protect their assets.
A YouTube workshop goes live on Dec. 4 to introduce the protocol. An AMA will be held on Dec. 5. A trading competition will be organized after the testnet launch. Prizes, including 10,000 USDC, will be awarded to winners. Programmatic trading APIs and SDKs will also soon become available for professional traders.