X-Margin, a specialist in applying privacy-preserving technology to credit and financial market risk, has raised USD8 million in a Series A funding round where Coinbase Ventures, HashKey Capital and Spartan Group were major investors.
Bixin Ventures, Miranda Ventures (Bybit), Gemini, Primitive Ventures and Kenetic Capital also participated in the funding round.
Existing investors that followed-on include Alameda Research Ventures, CMT Digital, CoinShares, DCG, GSR, and Polychain.
Additionally, X-Margin received backing by some of the most active trading institutions and users of X-Margin Credit. They included CMS Holdings, Wintermute, MGNR, Dunamis Trading, Pirata Capital, and Kronos Research.
Established in 2019, X-Margin has to date facilitated more than USD220 million of credit extended to institutions trading digital assets through direct lending and decentralized finance (DeFi) lending platforms. X-Margin’s risk engine currently monitors USD2 billion of trading portfolio assets.
X-Margin Credit connects institutional lenders and borrowers, and addresses a key issue holding back the growth of credit in the crypto space. Currently, lenders have little visibility over a borrower’s trading risk and often no control over the assets purchased with the credit extended.
Darshan Vaidya, Founder and CEO of X-Margin, says: “We’re thrilled that such high caliber investors share our vision for transforming credit for institutions trading digital assets. We believe a provably neutral risk engine can scale automated credit extension, giving any lending pool of capital visibility and control over the credit extended.”
X-Margin enables lenders of all sizes – including the largest in digital assets, family offices, trading venues and DeFi protocols – to operate a scalable, data-driven lending business. On X-Margin Credit, lenders can connect to creditworthy borrowers, monitor real-time risk and trigger margin calls if the value of a borrower’s net trading position falls outside the agreed parameters. Borrowers can establish their creditworthiness without revealing sensitive portfolio information through X-Margin’s privacy preserving technology and cryptographic proofs.
X-Margin’s credit scoring spans a borrower’s exchange, custody and DeFi portfolios. It computes risk without seeing the underlying trading data, so is provably unbiased in evaluating an institutional trading firm’s risk.
With X-Margin as a verifiably neutral arbitrator, lending firms can rely on automated control over funds when risk thresholds are breached. X-Margin Credit addresses trading firms’ need for a more competitive marketplace for capital.
Vaidya says: “Facilitating credit in crypto can generate substantially more liquidity and volumes in both CeFi and DeFi trading, and we believe X-Margin’s technology can be a big part of that, making credit risk more transparent and manageable. We will continue building out a platform where any pool of capital can access borrowers and easily operate a risk-managed lending operation.”
