Arbitrum-based derivatives venue Variational raises $50 million Series A led by Dragonfly

Arbitrum-based derivatives startup Variational has raised a $50 million Series A round led by Dragonfly Capital, according to an announcement on X on Wednesday.

The round also saw participation from Bain Capital Crypto and Coinbase Ventures. Bain previously led the company’s $10.3 million seed round.

Founded by Lucas Schuermann and Edward Yu, the Cayman Islands-based Variational aims to bring liquidity from traditional finance dealers and exchanges to onchain trading. The platform also aims to offer a wide array of derivatives, including real-world commodities.

On X, the firm noted its is starting "Phase 1 of our RWA rollout to stress-test" its infrastructure before launching over 100 TradFi markets this summer. Gold, silver, copper, and oil markets are now live, the team said.

Variational users will be able to trade these markets using a single cross-margined account, a feature that is rolling out across more and more crypto trading platforms.

By aggregating liquidity from existing venues, Variational says it can create deeper markets than existing onchain platforms like Hyperliquid, which uses an order book. In particular, Variational is using a Request-for-Quote (RFQ) system powered by a single liquidity provider, its Omni Liquidity Provider (OLP) vault, which will serve as a counterparty to all trades.

"Routing directly to TradFi sources allows Variational to bypass the bottleneck of bootstrapping order books, instantly plugging DeFi into massive off-chain liquidity,” the team wrote.

Other onchain platforms like Ostium have struck on similar solutions to the cold start problem of onchain RWA markets, by bridging liquidity from existing, traditional sources. 

That said, Variational is positioning itself as a more retail-friendly brokerage like Robinhood, via its in-development Omni app, which will offer "zero-fee" trading.