Founders Fund, Galaxy, Coinbase’s Base Ecosystem Fund, and Modular Capital have also invested in this round. The capital will be used to develop Avantis’ flagship product, a market-making and derivatives trading protocol.
Singh stated, “We see an opportunity to build a protocol serving complex LPs. They’re not your workhorse; they’re very complex, nuanced, online, risk-managing, profit-seeking strategies. The next big step is to build a protocol that serves their individual risk profiles.”
Many RWAs are available on-chain through DeFi protocols provided to recognized institutions, not for daily traders. Singh noted that Avantis plans to enable forex and commodity “risk-managed, online trading” without tokenization, which is a slow and costly process.
Singh said, “We’re using leverage trading mechanisms, and we’re not only extending it to assets in the real world, using oracles, but we’re also extending the LP aspect of everything by making it a little more complex.” “We want to call this the Uniswap V3 moment for LPs of these leverage protocols.”
Avantis’ basic trading tool is provided by oracles from Pyth and Chainlink, with low latency, aiming to provide traders with better pricing on centralized and decentralized financial markets. This platform is being developed on the Optimism Superchain, a chain network built with OP Stack and uses the stablecoin USDC as collateral for its protocol transactions.
In Q3 this year, Avantis conducted its private test phase on Base’s blockchain with initial services for trading bitcoin and ether derivatives. They plan to launch on Base’s mainnet in the first quarter of 2024 and deploy public access afterward.
Singh stated that their waitlist has around 90,000 registrants, but they began onboarding about 2,500 people over the past weekend. He added that it will not operate in the U.S. or any country sanctioned by OFAC unless approved to operate as a CFTC-licensed exchange.
This protocol aims to provide institutional and retail investors with the ability to trade cryptocurrencies and RWAs with up to 100x leverage on its decentralized exchange. The company said in a statement that it aims to provide these traders and liquidity providers with a better DeFi derivatives market-making and trading infrastructure as well as “efficient capital utilization capabilities.”
Combination capabilities are often an area “underexploited” by order book-based derivatives protocols because they have minimal trading opportunities for non-crypto assets. As a result, the DeFi space is largely limited to crypto assets.
Upon its mainnet launch, Avantis will operate with bitcoin, ether, and three forex pairs: GBP, JPY, and EUR. Over time, it will add various cryptocurrencies as well as “forex pairs” like INR and USD, as well as commodities like gold, silver, and crude oil.
Singh said, “I genuinely believe in empowering market access for anybody to produce these products.” “These things are not as complicated as people think. It’s just that they care deeply about market makers in the traditional corporate world… To do that, you have to create a complex tool that everyone can still understand and operate well on a large scale.”
It’s worth noting that while this platform aims to cater to various trader profiles, it’s not intended for people who are not “crypto-savvy and have never bought crypto in their life,” Singh said. “It’s for people who understand and get leverage trading. An understanding of leverage is crucial because, if you don’t understand it, you’ll end up burning yourself.”
In the long run, Avantis has a bigger roadmap to expand the capabilities of the protocols beyond perpetual trading and plans to start working on an options tool in the middle of next year.
Singh stated, “The goal is to build an entire ecosystem of products that are entirely profit-based on-chain.” “Options are a big step for us.” Additionally, Avantis’ “next adjacent products” could include “on-chain casinos” to leveraged money markets, he added.