Ex-Goldman Banker’s Crypto Startup Backed by Major Market Makers

(Bloomberg) — Market makers Flow Traders and Hudson River Trading have backed Sei Labs, a crypto startup founded by veterans of Goldman Sachs and Robinhood Markets Inc. that is developing a blockchain aimed at accelerating decentralized financial transactions.

The investments are part of a $5 million seed round led by Multicoin Capital, with participation from Coinbase Ventures and GSR, the founders of New York-based Sei Labs said Wednesday. The backers, which also include Delphi Digital and Tangent, will receive a mix of shares and future tokens from the platform.

DeFi applications — through which users trade, borrow, and lend crypto without a central intermediary — are typically built using popular blockchains such as Ethereum and Solana. These chains are often congested as the networks become busier, preventing market makers from being able to place orders consistently. Sei Labs’ protocol, which will launch later this year, will feature an integrated order book allowing DeFi projects and institutional market makers to process transactions and access liquidity faster.

The funding comes as the cryptosphere prepares for a major overhaul next month, when the Ethereum blockchain is about to begin a major upgrade process that could create myriad disruptions to its network. Crypto prices have been volatile in recent weeks before the change, while institutions have remained largely on the outside of the fray.

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The cash injection will be used to fund the network’s growth, Sei Labs co-founder Jeff Feng said in an interview. Feng spent three years at Goldman as a technology investment banker before moving into venture capital investing for Coatue Management. Sei was also co-founded by Jay Jog, a former Robinhood software engineer, with most of the startup’s engineering talent coming from Robinhood’s compensation team.

Built using code from the Cosmos blockchain, Sei’s infrastructure will be able to complete transactions in as little as 600 milliseconds, it said in a statement. In comparison, it takes on average between 12 and 14 seconds to complete a transaction on Ethereum, a preferred protocol for building DeFi applications.

Current order execution speeds on blockchain networks are “a deal breaker” for institutional market makers looking to gain access to the space, company ecosystem manager Dan Edlebeck said in a statement. interview.

As Sei was developed specifically to facilitate trade, its creators hope the network will overtake Solana as one of the preferred protocols for building DeFi applications. Solana was also originally designed for commercial use, Feng said, but later expanded into games and collectibles.

“Because we’ve built the whole chain around a backlog, all the things that Solana could but won’t do because it has a ton of other games and other use cases, we’re able to do so,” Feng said.

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