Solana DEX Zeta Markets raises $5 million in token round

Zeta Markets, a Solana-based decentralized exchange for trading crypto perpetuals, has raised $5 million in a strategic funding round led by Electric Capital.

Other investors in the round included Digital Asset Capital Management (DACM), Selini Capital and Airtree Ventures, Zeta Markets said Tuesday. Angel investors, including Anatoly Yakovenko of Solana, Mert Mumtaz of Helius, Richard Wu of Tensor, Genia Mikhalchenko of Pyth, JMR Luna of Wintermute and Nom of Bonk, also joined the round.

Zeta began raising for the round recently and closed it last week, founder Tristan Frizza told The Block. The round was structured "purely" as a simple agreement for future tokens (SAFT), Frizza said, declining to comment on the valuation.

Zeta's new funding round comes nearly three and a half years after it raised $8.5 million in a round led by Jump Capital in December 2021. The new round brings Zeta's total funding to $13.5 million.

Last month, Zeta announced its plans to launch its token, conduct an airdrop and release its Solana Layer 2 rollup later this year. Today, the firm said that the new funding round will help expedite the development of its Layer 2 network.

Zeta's Solana Layer 2 rollup

Zeta claims to be building the first DeFi Layer 2 rollup on Solana.

The rollup will use Solana for both settlement and data availability, making it a "fully native rollup," Frizza told The Block. The rollup is geared towards trading, he said, with order books "being a first-class citizen in the sequencer." Users will be able to "very quickly deposit funds into the rollup from Solana Layer 1 and then begin trading," he added.

Zeta expects "a massive improvement" in user experience with the rollup. When asked why Zeta would develop a Solana Layer 2 when the Solana Layer 1 blockchain is already so scalable, Frizza said the rationale is more similar to why dYdX, Hyperliquid, Aevo and others have explored their own app chains, Layer 1s and Layer 2s, respectively.

"The goal is to have a high degree of customization and really tailor the infrastructure to a trading use-case to provide an experience that competes with centralized exchanges," he said. "This means more control over block space, congestion, fee markets, transaction latency, etc. By building this on Solana, as opposed to an isolated app chain, we strongly believe we can tap into the rapidly growing pool of TVL [total value locked] and liquidity that is flocking to Solana DeFi," he added.

Zeta aims to launch the testnet of its rollup in the fourth quarter of this year and mainnet in the first quarter of 2025, Frizza said. The full white paper of the rollup is expected to be released publicly next week.

There are currently 18 "core contributors" working for Zeta, and Frizza plans to expand the team in the engineering, marketing and community-building functions.

Zeta token launch and airdrop timeline

Last month, Zeta said it is set to launch its "governance" token Z and distribute 10% of its total supply, or 100 million, through an airdrop.

Frizza said the token launch schedule is on track for this quarter. "We're pushing very hard to get it out sooner rather than later," he said. A snapshot for the airdrop hasn't been taken yet, but it will be taken "soon," Frizza added.

Founded in 2021, Singapore-based Zeta is one of the largest derivatives exchanges on Solana. Zeta says its platform recently crossed $6 billion in all-time trading volume.

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