C3 Protocol, a cryptocurrency trading project linked to the Algorand blockchain, has raised $3.6 million led by Arrington Capital and Jump Capital.
C3′s ambitious plan to allow decentralized finance (DeFi) liquidity to flow across blockchains was also backed by Golden Tree Asset Management, Cumberland, ParaFi Capital, Mechanism Capital, Borderless Capital, Node Capital and Digital Currency Group (the parent company of CoinDesk).
Cryptocurrency trading grew out of retail exchanges and developer-led blockchain projects, in contrast to legacy finance, which started with institutions building infrastructure that suited their needs. As such, the concept of prime brokerage in traditional finance – a bundle of services often offered by investment banks that includes lending, cash management and netting – is gradually being replicated in the cryptocurrency world.
Founded by the Rand Labs team that built Algorand staples My Algo Wallet and AlgoExplorer, C3 is focused on creating a new layer for using collateral and margin across different blockchains, starting out by connecting collateral management Algorand and Ethereum, with the same cross-chain functionality also coming to Algrand and Solana.
“The way Ethereum DeFi was built, every team tackled a separate vertical such as lending and borrowing, perpetuals or DEXs [decentralized exchanges],” C3 founder Michel Dahdah said in an interview. “But having all these different financial products isolated in terms of how they manage collateral makes it impossible for them to cross margin, meaning the collateral you’re using to borrow money for shorting, for example, can’t be used to also open a long position in a perpetuals financial product.”
C3 will operate a “global clearing engine,” Dahdah said, so that users can lock collateral in one place and use it across a range of positions, in the same way that prime brokers act as a hub for collateral management in traditional finance.
“C3 is an ambitious idea. It bridges the gap between TradFi and DeFi trading by completely rethinking how we manage collateral across both blockchains and DeFi protocols,” Ninos Mansor, partner at Arrington Capital, said in a statement. “They are taking on one of the biggest challenges in all of DeFi, a pain point that will continue to grow as DeFi becomes increasingly multi-chain.”
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