- Paradigm — a zero-fee institutional liquidity network for derivative traders — recently announced the closing of a $35 million Series A funding round. These are the details.
Paradigm — a zero-fee institutional liquidity network for derivative traders — recently announced the closing of a $35 million Series A funding round. This funding round values the company at $400 million and was co-led by Jump Capital and Alameda Ventures. And the company is bridging the infrastructure gap between crypto and traditional finance by serving as a liquidity access point to institutional buyers and sellers for large and/or complex derivatives trades across both CeFi and DeFi markets.
Over 25 investors joined the Series A, including Genesis Trading, QCP Capital, Nexo, Optiver US, IMC, GSR, Akuna Capital, Babel Finance, MGNR, Avon Ventures, CMT Digital, executives at Goldentree Asset Management, and Amber Group. Investors from previous seed rounds Dragonfly Capital, Digital Currency Group, Vectr Fintech Partners, and Mirana Ventures, Venture Partner of Bybit and BitDAO also participated.
For institutional investors, finding liquidity on-demand that is tailored to their price, size, immediacy, and risk preferences can be an extremely challenging task. Before Paradigm launched, institutional traders had to maintain their own private network of counterparty relationships to help source liquidity, especially for large and multi-leg/complex trades. And no standardized workflow automation tools exist today to facilitate the negotiation and execution of complex, multi-leg, and multi-product strategies via a single atomic transaction.
Through Paradigm, traders connect directly with institutional counterparties in the Paradigm network to get better-than-market prices (often at mid pricing) and for much larger sizes. And Paradigm also provides all the workflow automation tools necessary to facilitate multi-leg and multi-product strategies with underlying hedges via a single executable structure. This increases trading precision, eliminates leg risk, and lowers execution costs since all legs and hedges are executed as one single block, as opposed to piecing the trade together manually on screen. Plus the platform is also free to use.
The company also works with over 600 institutions and trading volumes on the network have increased upwards of 1300% year-over-year to $10B in total volume traded per month. And Paradigm has grown significantly in 2021, increasing its headcount 3x while capturing a 30% market share of options volume globally.
Paradigm’s product suite also includes complex order books focused on spreads and combinations, spread matrices for futures, and loans rate curves. And traders on Paradigm choose the settlement venue where they want their trade to settle, which allows Paradigm to remain non-custodial and charges no fees.
KEY QUOTES:
“We estimate that large and multi-leg orders account for roughly 30% of global listed derivatives volumes, or roughly $50-75 B per day. At Paradigm, we are focused on establishing a robust network before monetizing. This funding round allows us to continue building out our network of institutional traders, CeFi exchanges, and DeFi protocols, while also enhancing our 24/7 customer support, and expanding upon our current product offerings to better accommodate the needs of our clients.”
— Anand Gomes, Paradigm’s Co-Founder and CEO
“Institutional Infrastructure in Crypto Capital Markets is still nascent and liquidity highly fragmented”, said Saurabh Sharma, Partner at Jump Capital. Paradigm is disrupting that by providing a single point of access to global liquidity and a unified execution & settlement layer to most institutional traders in the world.”
— Saurabh Sharma, Jump Capital
“For every large or complex trade, the trader needs to ping multiple chats, get quotes and process them manually, settle them on a one-off basis. Paradigm makes this workflow seamless for complex derivatives transactions delivering pricing efficiency, low execution and settlement risk. As the industry matures, Paradigm will play an increasingly important role in the ecosystem.”
— Ramnik Arora, Alameda Ventures
“Paradigm’s efficient workflow saves time and reduces settlement risk for our trading desks. Their diverse network of counterparties and liquidity providers will continue to grow as they expand to new products.”
— Andrew Quine, Akuna Capital
“We’re excited to support Paradigm in their mission to bring on-demand liquidity to the crypto options market. Through their innovative RFQ platform, Paradigm is helping to facilitate price discovery and deepen liquidity in the emerging digital assets volatility space, which closely aligns with Optiver’s commitment to competitive and transparent markets.”
— Liam Smith, Optiver US
QCP Capital, one of the largest traders on the platform and lead investors said “Paradigm provides the missing link for institutions looking to move into crypto. Liquidity has been a persistent problem in the crypto space for sophisticated traders looking to trade large and complex products. Paradigm’s approach to building a liquidity network powered by CeFi/DeFi agnostic settlement infrastructure is transformational, not just in crypto but for capital markets broadly.”
— Darius Sit, QCP Capital
“Paradigm offers a unique proposition to institutional investors seeking liquidity in derivatives on digital assets. We are proud to team-up with Paradigm to continue to improve this market for its participants and help bring best in class liquidity to this growing ecosystem.”
— Michiel Knoers, Head of Trading, IMC
“We are excited to return as investors in Paradigm. We believe Paradigm is one of the most promising institutional liquidity networks and we are excited to back the team in building such a game-changing trading infrastructure. As a returning investor, we are committed to collaborating with Paradigm on strategic initiatives and supporting the team in scaling new heights.”
— David Toh, Mirana Ventures
“Nexo aggregates and executes sizable trading volume on behalf of its global customer base, whereby market discovery and liquidity often pose concerns. Paradigm’s network of liquidity providers can alleviate a number of risks, and enhance market and price efficiency for large institutional players.”
— Tatiana Metodieva, Nexo
