LN Markets has announced the closing of a pre-seed financing round with Bitfinex, Arcane Crypto and Fulgur Ventures.
This is the first bitcoin derivatives exchange built on Lightning Network which, in order to proceed with the project, has organized a financing round in collaboration with Bitfinex.
Arcane Crypto, which develops and invests in projects focused on bitcoin and digital assets, and Fulgur Ventures, an investor in start-ups, Bitcoin and Lightning Network applications.
Taking advantage of the unique features of Lightning Network, LN Markets allows traders to instantly trade their funds and execute transactions directly to or from their own wallets, without constraints or delays.
In addition, it uses the scalability of this second layer on the Bitcoin network to achieve instant, highly cost-effective transactions avoiding on-chain transactions.
This minimizes the need to use the exchange as a custodial of their funds, and allows traders to respond quickly to market demands.
This solution was developed by ITŌ, a start-up focused on Bitcoin and founded in 2019 by Côme Jean-Jarry, Victor Afanassieff and Romain Rouphaël.
The alpha version was launched in mid-March 2020, and has since seen substantial growth in users.
A limit of 0.01 BTC per exchange is currently set as a precautionary measure, but despite this, users have already performed more than 25,000 transactions, with a total volume of over $10 million.
LN Markets, Bitfinex and Arcane Crypto
LN Markets co-founder Côme Jean Jarry said:
“We are very happy with the group of investors as they have a deep understanding of the space and can add massive value to our company. With their investment and backing we will be able to accelerate our development and offer new trading experiences to our users. Bitcoin is both a financial asset and a very powerful financial infrastructure and we intend to develop both aspects of it”.
Bitfinex’s Chief Technology Officer, Paolo Ardoino, commented:
“This is one of our first public investments and underlines our support for the Lightning Network. When we look at a project such as LN Markets, we see a direct application of the technologies that we love. It is therefore important for us to provide funding and to participate in such an innovative venture”.
According to Tobias Hoffmann, Bitcoin developer, financial market professional and user of LN Markets, this solution allows traders to react very quickly and move funds faster than ever before, opening up new arbitrage possibilities and demonstrating how exchanges should allow their users to trade with their funds.
The CEO of Arcane Crypto, Torbjørn Bull Jensen, also agrees:
“Having used LN Markets since launch and been in conversations with the team for a while, I am very comfortable that this is something that can get really big. Bitcoin is ideal as a collateral asset, and by leveraging lightning payments, LN Markets position themselves at the cutting edge of the new financial system evolving around bitcoin”.
Lightning Network and DeFi
In the meantime, however, LN doesn’t seem to find much favour among DeFi apps.
Indeed, while there are 79,460 synthetic bitcoin in the DeFi sector, there are only 1100 on the Lightning Network.