Crypto market maker Byte Trading raises $7 million in seed funding

Byte Trading, a crypto market maker specialized in derivatives, has raised $7 million in a seed funding round.

Sharing the news exclusively with The Block on Tuesday, Byte Trading said Switzerland-based venture capital firm Redalpine, which is an investor in popular startups such as Robinhood and N26, led the round. Other investors in the round included Possible Ventures, L1 Digital, and D4 Ventures.

As part of the deal, Redalpine general partner Harald Nieder and Possible Ventures partner Simon Leicht have also joined Byte Trading’s board of directors, Byte Trading co-founder Dominik Vacikar told The Block.

This was an equity funding round and will help Byte Trading expand its team, integrate more exchanges, and grow its assets under management (AUM) by 50 times within this year, said Vacikar.

Vacikar declined to comment on Byte’s current exchange partners and AUM but said the firm has a “very small piece” of the daily volume of crypto derivatives. When asked how it plans to gain market share in a competitive market-making space, Vacikar said his and his co-founder Jan Hoekman’s background in alternative datasets is the firm’s unique advantage.

Many crypto market makers come from a background in traditional finance, said Vacikar. But since crypto markets behave differently from traditional markets because they are driven by more forces than just the order book, such as momentary sentiment, they require a different approach, according to Vacikar.

“We think many traditional players overlook this fact and mainly apply the same playbook as in traditional markets, and that’s where our background has been very beneficial,” he said.

Byte Trading plans to remain focused on crypto derivatives, said Vacikar, when asked if the firm plans to support spot markets as well.

Byte Trading is the first new crypto-focused market maker to recently emerge in the public sphere. Wintermute raised its seed round in early 2020 and is today one of the largest crypto market makers, alongside Alameda Research, Jump Trading, GSR, and Cumberland DRW.

Vacikar said Byte Trading has been profitably market-making since its launch early last year. There are currently eight people working for Byte Trading, and Vacikar said he is currently hiring for several roles, mainly engineering. 

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