Cycles has secured $6.4 million in new funding to build an open, privacy-preserving clearing network intended to boost capital efficiency across digital asset markets.
The round was led by Blockchange Ventures, with participation from Coinbase Ventures, Compound VC, Primitive Ventures and several individual backers. Including a $2.3 million pre-seed round completed in 2025, the Toronto-based startup has now raised a total of $8.7 million.
Product rollout and initial partners
Cycles plans to use the capital to speed up product development and launch its first product, Cycles Prime, an institutional clearing service.
Cycles Prime is designed to let trading firms privately net their over-the-counter (OTC) obligations across the network without moving collateral or changing existing counterparties. Prime brokerage platform FalconX and settlement network Lynq are onboard as initial partners in the institutional pilot.
Company background and leadership
Cycles was spun out of Informal Systems and is led by chief executive Ethan Buchman, a co-founder of the Cosmos blockchain network.
The company is building a clearing network that supports multilateral netting across trading and payment flows. The aim is to reduce counterparty exposure and unlock greater efficiency for on-chain financial operations.
Market gap in crypto clearing
In traditional finance, clearing houses compress transaction obligations so only net differences are settled, reducing liquidity needs and capital tied up in margin and collateral.
By contrast, most crypto markets operate without robust clearing infrastructure. Participants frequently must fully pre-fund positions, which locks up liquidity and can amplify stress during volatile periods.
On October 10, 2025, roughly $19 billion in crypto leverage was liquidated, with 70% of that occurring within 40 minutes, highlighting how quickly imbalances can cascade when leverage is high and collateral is fragmented across venues.
Growing institutional presence
The funding round comes as digital asset markets continue to attract more institutional capital. As of April 2026, more than 4,500 institutional entities reportedly held spot Bitcoin exchange-traded products.
This shift from largely retail-driven speculation toward a more structured market environment is putting greater focus on core infrastructure, including credit, settlement and clearing layers.
Capital inefficiency and recent liquidations
Cycles’ core objective is to address capital inefficiency stemming from the absence of a central clearing mechanism in most on-chain markets.
Without netting, participants must maintain fully funded positions and collateral across multiple platforms. This ties up capital that could otherwise be deployed for trading, lending or other activities.
The structural risks remain evident. Around May 19, 2026, about $657 million in leveraged positions were liquidated in a 24-hour window, with nearly 89% of those liquidations hitting long positions during a market dip. The episode echoed previous liquidation waves and underscored the fragility of highly leveraged, pre-funded structures.
How Cycles Prime works
Cycles Prime is designed to reduce these pressures by allowing trading firms to privately calculate and net their OTC obligations with each other across the network.
Because obligations are offset without requiring assets to move or collateral to be continually re-posted, the model could reduce the capital burden associated with active trading and prime brokerage.
The participation of FalconX and Lynq signals that existing institutional networks are actively exploring methods to optimize liquidity use and settlement processes.
For market participants, a functional clearing layer could change how capital and exposure are managed, potentially freeing liquidity that is currently locked in fragmented settlement arrangements.
Privacy and security technologies
A central design element of the Cycles system is its reliance on privacy-preserving technologies, including zero-knowledge proofs and trusted execution environments.
Zero-knowledge proofs allow participants to verify the correctness of the netting process without revealing underlying positions, strategies or bilateral relationships to the broader network.
Trusted execution environments provide secure hardware-based enclaves for computation, adding another layer of protection for sensitive data and order flow.
These tools are intended to make net settlement both efficient and confidential, a key requirement for institutions that must protect proprietary trading information.
Expansion into payments with Cycles Pay
Beyond institutional trading, Cycles plans to launch a second application, Cycles Pay, focused on stablecoin-based payments.
Cycles Pay is designed for individuals and businesses to send and receive payments while optimizing cash flow and preserving privacy through network-wide netted transactions.
The product targets the growing business-to-business stablecoin segment, which accounted for an estimated 60% of all “real” stablecoin payment volume in 2025. By netting payment obligations, the system aims to reduce the frequency and size of on-chain transfers while maintaining settlement integrity.
Building a unified clearing base layer
Cycles positions its network as a unified clearing base layer for decentralized markets, initially serving two main use cases:
- Cycles Prime for institutional trading and OTC flows
- Cycles Pay for commercial payments using stablecoins
By applying the same netting and privacy framework to both large-scale trading and everyday payments, the company aims to improve how money and collateral move across the digital economy.
Outlook and what to watch
The progress of the institutional pilot with FalconX, Lynq and other early participants will be a key indicator of whether multilateral netting can gain traction in crypto markets.
If adoption grows, such clearing infrastructure could:
- reduce collateral fragmentation and capital lock-up
- dampen the severity of liquidation cascades during volatility
- provide a more stable base for institutional participation in on-chain finance
The coming months of testing and integration will show how quickly these mechanisms can move from pilot stage to becoming a standard component of digital asset market structure.
Want deeper context on institutional-grade crypto rails? Explore how traditional finance meets blockchain in Toobit’s TradFi vs DeFi guide today.
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