Struct Finance offers a protocol where on-chain structured products can be composed, customized and invested in so that they are better suited to different profiles of investors.
They collected a total of $3.9 million from 24 elite investors, including Avalanche’s 200 Million Blizzard Fund, Antler, Avalaunch, Infinity Ventures Crypto, Keychain Capital and 0xVentures.
What are structured products?
Structured products utilize a variety of different interest rate products options and other financial instruments to build a variety of investment opportunities. By mixing and matching various financial instruments, structured products can be constructed to have varying risk profiles, market expectations, and asset classes.
These products have been on the rise and reached over $7 trillion in TradFi, and have been collecting attention in DeFi. Founder of Asymmetries Technologies Justin Huang commented on the rapid spread of structured products in the DeFi market and said:
“With the Defi markets developing, customized structured products will be flourishing. The market will need core products to meet this growing demand.”
However, most parameters available on different derivative instruments are mainly set by protocol developers and are fixed in nature. The investors have no control over the variables and have no choice other than to take it or leave it.
Another problem with structured protocols appears as liquidity. As a result of having multiple maturity dates, many protocols offering these instruments experience fragmented liquidity. In addition, having multiple maturity dates while continuing to utilize conservation functions either result in high charges to discount rates or high slippage.
Despite these issues, structured protocols are increasingly gaining traction. Even though covered calls and marginated cash puts are the main structured products used in DeFi for the time being, Struct Finance includes much more than them.
What is Struct Finance’s solution?
Struct finance removes rigid derivatives altogether and creates a platform where users can customize interest rate instruments and compose them with options available in the ecosystem to build superior financial products.
The platform offers several investment choices and detaches risk management and complex pricing from its users while providing varying protection levels and highly competitive yields on various digital assets.
The platform is currently launching on Avalance but will scale into other EVM compatible chains in the near future.
Stressing the importance of structured products for DeFi, Avalaunch’s co-founder Mark Stanwyck said:
“As crypto markets mature and DeFi takes root, the need for sophisticated instruments which are capable of supporting the demands of institutional and retail investors becomes paramount.”
He then continued to comment on Struct Finance’s creative approach to structured products by saying:
“Struct not only offers this, but also allows users to compose existing instruments together, opening an endless array of strategies. The team behind Struct has done nothing but build and execute around these novel concepts, and it’s an honour to be able to support them on their journey.”