Coinbase Ventures is backing Cycles, a crypto startup that has raised $6.4 million to address a settlement inefficiency in trading markets. Trading firms still settle many obligations individually across multiple counterparties and venues, even when parts of those positions offset one another. The result is that cash and collateral can remain tied up unnecessarily.
Cycles is building a network designed to net those exposures across participants so that firms can settle less gross value with less capital locked in the process. To support that model, the company uses zero-knowledge proofs and hardware-based security, allowing obligations to be verified without exposing sensitive trading data.
The case for the business rests on capital efficiency. As liquidity remains fragmented across venues and balance-sheet costs stay elevated, firms have more incentive to reduce idle collateral and limit the amount of credit needed to keep trading. The main constraint is adoption: the utility of the network rises with participation, because a broader set of members creates more opportunities to offset exposures across the market.