Synthetic asset protocol for Polygon raised $1.5M in seed round

Polygon-based synthetic asset platform, Polysynth has secured investments from a number of DeFi venture capital firms and angel investors.

Synthetic asset protocol for Polygon raised $1.5M in seed round

According to the announcement, Polysynth has raised $1.5 million in seed funding round on Nov. 15. The funding round has participation from Jump Capital, DeFi Alliance, Hashed, and a number of individuals such as Alan Howard, co-founder of Brevan Howard Asset Management, and Polygon’s co-founders Sandeep Nailwal and Jaynti Kanani.

Polysynth said that the funding to expand its team of engineers, designers, and marketers, in addition to carrying out security audits for the protocol.

The platform is currently in beta, testing just a handful of assets including BTC, ETH, and MATIC perpetual futures. When living on the mainnet, the protocol aims to build out derivatives for 100,000 different mainstream and crypto. The platform will also offer a scalable virtual market maker (VMM), which the team claims to offer several advantages over a traditional order book or automated market maker.

Virtual Market Maker does not use the collateralized debt position (CDP) model that typically normal automated market makers employ. Instead, traders use stablecoin collateral to open long or short positions for each synthetic asset. They can access the liquidity and other benefits such as low slippage and better quotes by supplying stablecoins and using those to buy and sell synthetic assets directly.

Jump Capital Partner, Saurabh Sharma, elaborated that “Polysynyth eliminates capital inefficiency in the traditional over-collateralization approach and hence significantly reduces the barriers for mass adoption.” Sharma explained that current synthetic asset solutions typically require five times the collateral and manual re-balancing, adding “Polysynth's VMM based model eliminates these challenges by allowing traders to trade against a virtual constant product curve.”

The protocol is launching a trading competition on Nov. 16. Users who generate the highest returns or report bugs present on the platform will be eligible for cash rewards. PolySynth also stated its intention to form a DAO and launch a governance token in the future.

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