Variational raises $50M to pipe traditional finance liquidity onto blockchain
What's the deal? Variational, a Cayman Islands-based startup building a protocol for decentralised derivatives trading, has raised a $50 million Series A led by Dragonfly Capital, with participation from Bain Capital Crypto and Coinbase Ventures. The company previously closed a $10.3 million seed round led by Bain Capital Crypto in 2021.
Rather than building its own order book from scratch, Variational aggregates liquidity from large crypto exchanges and traditional finance dealers — aiming to offer deeper markets for derivatives, including commodities and other real-world assets, on blockchain rails.
The company was co-founded by Lucas Schuermann and Edward Yu, who met as freshmen at Columbia. They previously ran a quantitative trading firm acquired by Barry Silbert's Digital Currency Group before leaving in 2021 to start Variational, which now has 24 employees.
Why now? Crypto and traditional finance are converging fast. Singapore-based Hyperliquid has become a go-to venue for trading commodities on weekends, and the broader push to wrap real-world assets in blockchain infrastructure is accelerating. Variational sees an opening: even the most liquid on-chain markets have "a 100x gap or more" versus traditional venues like the CME, according to Schuermann.
"Order books have a cold start problem. They're not porting liquidity, they're rebuilding liquidity," Schuermann told Fortune.
What could go wrong? The space is getting crowded. Hyperliquid is currently the hottest venue in crypto trading, and Variational shares surface-level similarities — both host retail-facing apps for perpetual futures, both started on Arbitrum, and both offer vault-based liquidity pools that act as counterparties to user trades.
Variational's founders argue the platform isn't directly competitive with exchanges. Schuermann called it more "brokerage-like," comparing it to Robinhood for its zero-fee trading model. But convincing traders and liquidity providers to adopt yet another venue remains a challenge, especially while Variational's Omni platform is still invite-only.
The signal: This raise reflects a broader bet that the next phase of crypto growth won't come from rebuilding financial infrastructure from scratch — but from bridging it. Variational's thesis is that blockchain-native platforms can win by tapping into the vastly deeper liquidity pools of traditional finance rather than competing against them.
If that model works, it could accelerate the blurring of lines between on-chain and off-chain markets, making derivatives trading faster, cheaper, and more globally accessible. The $50 million war chest suggests investors believe the convergence trade is real.
Read more: fortune.com
