The market makers Flow Traders and Hudson River Trading have backed Sei Labs, a crypto startup founded by Goldman Sachs and Robinhood Markets veterans that is developing a blockchain aimed at speeding up decentralized finance transactions.
The investments are part of a $5 million seed round led by Multicoin Capital, with participation from Coinbase Ventures and GSR, New York-based Sei Labs's founders said on Wednesday. Backers, which also include Delphi Digital and Tangent, will receive a mix of equity 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 often get congested as the networks get busier, stopping market makers from being able to place orders consistently.
Sei Labs's protocol, to be launched later this year, will feature a built-in order book allowing DeFi projects and institutional market makers to process transactions and access liquidity at faster speeds.
The funding comes as the cryptosphere prepares to undergo a major shake-up next month, when the Ethereum blockchain is set to begin a significant upgrade process that could create myriad disturbances on its network.
Crypto prices have been volatile in recent weeks ahead of the change, while institutions have largely remained on the outside the fray.
The cash injection will be used to fund growth of the network, 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 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 hailing from Robinhood's clearing team.
Built using code from the Cosmos blockchain, Sei's infrastructure will be able to complete transactions in as fast as 600 milliseconds, it said in a statement. By comparison, it takes 12 to 14 seconds
Current speeds for completing orders on blockchain networks are "a deal breaker" for institutional market makers seeking to access the space, Dan Edlebeck, the firm's head of ecosystem, said in an interview.
As Sei was developed specifically to facilitate trading, its creators hope the network will overtake Solana as one of the preferred protocols for building DeFi apps. Solana was also originally designed to be used in trading, Feng said, but later expanded into gaming and collectibles.
"Because we've built the entire chain around an order book, all of 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," Feng said.
