Opyn, an Ethereum-based options issuance platform, has raised a $2.16 million funding round led by Dragonfly Capital.
Announced on Monday in a blog post, the funding round drew support from 1kx, A. Capital, Version One Ventures, Uncorrelated Ventures, Balaj Srinivasan, Robert Leshner and others.
Recently, Decentralized Finance (DeFi) has gained substantial traction, with protocols like Compound and Balancer issuing platform-specific tokens that have boosted their liquidity. As such, services related to decentralized finance (DeFi) protocols, such as risk management, are grabbing attention as users seek ways to hedge against perceived risks.
"Risk is endemic to DeFi, from technical risk of smart contract hacks, to volatility risk in the assets that act as collateral. Everyone knows that DeFi is still in its infancy, and for it to make it to the next stage of adoption, it needs a way for users to hedge against these risks," Dragonfly Capital partner Tom Schmidt said in a separate statement.
Opyn is one of a cluster of emerging startups that aim to solve this problem, as it provides a two-sided marketplace that resembles, in certain ways, a traditional insurance market.
Users seeking to protect their deposits on decentralized finance protocols like Compound can purchase options contracts whose underlying asset can cover the value of their deposits. If the protocols become insolvent, they can exercise these options to claim the amount of their lost deposits.
On the other side of this marketplace are options contract creators who lock up ETH collateral and issue options represented by the so-called oTokens. They can then sell these tokens on decentralized exchange Uniswap to insurance buyers.
"As DeFi continues to grow at its current rate, a thriving options ecosystem will be an important next step for its maturation and eventual mass adoption," Opyn CEO and co-founder Zubin Koticha said in the blog post.
The platform launched in February and currently sits at around $1.4 million in total value locked, according to DeFi Pulse. Its daily trading volume has also grown, coming in at $1.4 million last week, and 476 unique addresses are oToken holders.
The team plans to use the newly raised capital to make new hires and improve security features.