Structured products are set for major changes. These investment vehicles are now decentralized, which allows them to be modular. Struct Finance secured seed financing of $3.9 million to bring about the age decentralized structured products.
A Different Approach
Decentralized finance is a popular concept in cryptocurrency and blockchain. This industry is worth more than $220 billion and has seen a rapid growth from its humble beginnings. This industry is attracting many users looking for high yields, simplicity, and elimination of intermediaries. The space is in constant need of new innovation, especially with respect to institutional-grade products.
Decentralized structured products could be the catalyst for mainstream DeFi participation. Struct Finance products offer users the ability to customize their product, unlike traditional ones. A user may, for example, customize interest rates or combine various options from the ecosystem to make more complicated products. There are many investment options that users have the ability to tailor to suit their risk appetite.
Lancer Capital Managing Partner Candice Zhao comments:
“Investors and institutions are forever faced with large swings in yields and token prices, or uncertainty and unquantification created by overly complex derivative protocols. Struct Finance will bring structured financial products (deFi) to investors, offering them attractive stablecoin yields. I am an admirer of their team, and I believe that fixed-income related products will become the first choice for institutional investors.”
The core benefits of structural finance include:
- There are many levels of protection.
- Complex pricing and abstracting risk management
- High-competitive yield options across digital assets supported by the company.
Struct initially launches on Avalanche’s blockchain, but will eventually expand into other networks compatible with EVM to provide better asset availability and more composability options.
Structured products are in high demand
This is an important time for decentralization of structured products. Although decentralized finance has become a major industry, the problems associated with traditional derivative products are not going away. Users cannot choose the product they wish to invest in when working with traditional providers. Customers must choose among the options offered by their provider.
This may lead to industry stagnation. Structured products, which are now worth $7 trillion, will continue to grow. The concept has also gained momentum in decentralized financing, principally through covered calls and cash-margined put. Struct Finance will capitalize on the opportunity to offer more investment options than ever.
The decentralization of financial vehicles could lead to better liquidity, lower slippage and minimal changes in discount rates. This is especially true if there are larger volumes at low market depth. These aspects are crucial when dealing in liquidity across assets and multiple maturity dates of derivative products.
A strong investor backing
Many blockchain and crypto investors like the vision of Struct Finance. The team’s recent seed funding round attracted $3.9 million from two dozen top-tier investors and firms. Arcanum Capital and Finality Capital Partners are among the participants. Investors are showing strong support for Struct Finance, decentralized structured products and Struct Finance as a viable frontier.
Arcanum Capital Founding Partner Karthik Bupathi adds:
“We decided to support Struct Finance because we feel they are creating a much needed cross-chain solution for both institutional and retail participants to launch their own structured products with fewer design limitations, allowing for more innovative investment products.”
Struct Capital’s seed funding allows it to develop its tools for institutional customers. These tools will help users customize interest rate products and allow for constructing next-generation structured products playing to different investor profiles’ strengths.