The next DeFi (Decentralized Finance) evolution is being built by Cega by introducing non-native capabilities to cryptocurrency. Cega Finance has raised $4.3 million from Dragonfly for this initiative.
The product developed by Cega is a decentralized app created on the Solana blockchain that merges basic options such as call or put with more advanced ones to develop packaged services for investors. Cega’s first exotic options product is the fixed coupon note, a basket of puts, and a call with knock-in and knock-out barriers.
With the exotic structured product, all retail investors are benefitted along with superior yields, compounded returns, and downside protection. It benefits the market makers as it offers a discounted hedge for investors’ portfolios and allows proprietary gains via hedging trades.
Explosive growth rates were witnessed last year in DeFi derivatives, and the platform found the market in its early stage, according to the former derivatives traders, CEO, and co-founder of Cega, Arisa Toyosaki. DeFi has experienced more than 300% CAGR in two years, with almost 4 million users today. The team believes that the product offering that generates better safety and higher yields to the users during the times of volatility of cryptocurrency expansion will become important to the entire ecosystem’s growth.
The funds will be used to create a bright community that focuses on calibrating stats models, expanding the product offerings, and promoting awareness among the users regarding derivatives and DeFi.
Cega Finance is attempting to change the DeFi space, said Dragonfly’s General Partner Tom Schmidt. DeFi undergoes a process in which a team develops an innovative financial primitive that in turn spurs the development of the entire category of financial products and expands the whole market. This behavior was also witnessed in the case of Uniswap’s AMMs, as well as Compound and Cega will do the same with structured products and exotic derivatives, a huge gap that exists in the DeFi space.
According to Co-Chief Investment Officer of Pantera Capital, Joey Krug, Cega will be opening an additional layer of unexplored potential in derivatives where the team will witness an opportunity of multi-trillion dollars in order to obstruct traditional finance. He added that the exotic options had proved to be essential instruments in managing and transforming risk, and now the DeFi offers a chance to re-introduce those instruments with higher efficiency and transparency.
In addition to it, the company is backed by many partners in the market-making sphere. Alameda Research’s partner Brian Lee stated that his company is looking forward to supporting the team as they believe exotic products are indeed the next-gen evolution in the DeFi space. Traditional finance experienced market expansion that was driven by derivatives innovation, and Cega has the power to push such frontiers for the crypto community.
Cega Finance will revolutionize the DeFi community by providing a kind of capability that is completely new and innovative to the whole ecosystem. High-yielding exotic derivatives with in-built protection offered to the users is a much-required primitive, and the company has witnessed strong traction with institutional players and protocol partners in financing the structured products. The extensive adoption of these products will aid in pushing forward the new DeFi frontier.