Decentralized finance protocols continue to turn heads among investors and VCs. Today, Struct Finance has raised $3.9 million in seed funding to enhance the appeal of decentralized structured products, which are in high demand.
Structured Products Gain Momentum
There are many ways to gain exposure to financial vehicles. Structured products are an intriguing option. It is a “construct” investment option that one can adjust based on risk appetite, market expectations, and asset classes. In the cryptocurrency world, derivatives have proven very popular. A structured product offering would be the next step in the evolution of derivatives, attracting broader mainstream interest.
Most people will be familiar with structured products, although under a different name or format. Any instrument having its performance or value linked to an underlying asset qualifies as a structured product. Market indices, bonds, commodities, currencies, and interest rates are the most common examples.
Structured products represent a $7 trillion market in traditional finance. However, it is now gaining momentum in decentralized finance through covered calls and cash-margined puts. Struct Finance aims to broaden the appeal of these constructs and enhance the options users can explore. That is not without challenges, though, as instrument parameters are primarily static rather than dynamic.
Additionally, protocols providing exposure to structured products will often suffer from fragmented liquidity due to multiple maturity dates. These issues result in high slippage or significant changes to discount rates when larger volumes come in during low market depth. As a result, a new approach is needed, and Struct Finance offers a glimpse of what that solution may look like.
A Different Approach By Struct Finance
Through Struct Finance, users can access structured products and customize interest rate instruments. Additionally, users can compose these instruments with any options available under the Struct Finance banner. As a result, there is tremendous customization, and financial products can be either straightforward or incredibly complex. Offering users more investment choices with varying protection levels results in a better user experience without dealing with complex pricing.
Avalaunch Co-founder Mark Stanwyck comments on Struct Finance:
“As crypto markets mature and DeFi takes root, the need for sophisticated instruments which are capable of supporting the demands of institutional and retail investors becomes paramount. Struct not only offers this but also allows users to compose existing instruments together, opening an endless array of strategies. The team behind Struct has done nothing but build and execute around these novel concepts, and it’s an honor to be able to support them on their journey.”
The Struct Finance team has a unique approach to structured products, appealing to novice and advanced traders. Thanks to a fresh capital injection to the tune o $3.9 million in seed funding, they can develop the necessary tools to let users customize, compose, and invest in decentralized structured products. Investors in the round include Blizzard Fund, Assymetries Technologies, Avalaunch, Bixein Ventures, FBG Capital, SCC Investments, Woodstock, and nearly two dozen others.
Moreover, the focus will be on tools for institutions, as they can bring in the majority of liquidity and new users. Institutions will be able to customize interest rate products and provide new solutions custom-tailored to the needs of individual investors.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
Source: https://cryptodaily.co.uk/2022/03/struct-finance-closes-4-million-for-decentralized-structured-products