Blockchain clearing startup Cycles has raised $6.4 million in fresh funding to scale its decentralized clearing protocol and launch new products aimed at making digital asset markets more capital-efficient.
The latest round brings Cycles’ total funding to $8.7 million, following a $2.3 million pre-seed round completed in May 2025. Blockchange Ventures led the new round, with participation from Coinbase Ventures, Compound VC, Primitive Ventures and several angel backers. The earlier pre-seed was co-led by CMCC Global and Maven 11.
Cycles was founded by Cosmos co-founder Ethan Buchman and is building what it describes as an open clearing protocol. The system is designed to reduce the amount of capital firms must lock up to settle trades by allowing participants to net obligations across a wider network, instead of settling each transaction one by one.
How the clearing protocol works
At the core of Cycles’ approach is multilateral netting, a process widely used in traditional finance clearing houses but still uncommon in digital asset markets.
Rather than having every firm settle every trade in full, the protocol aggregates all obligations between participants and calculates the smallest possible set of payments needed to balance the system. Only these net amounts are settled, freeing capital that would otherwise sit idle as pre-funded collateral.
The protocol combines several technologies:
- zero-knowledge proofs to verify obligations without revealing sensitive transaction details
- trusted execution environments (TEEs) to provide secure computation
- graph algorithms to map and optimize the network of obligations and minimize capital movement
Buchman says the objective is to support capital-efficient transactions at global scale, while preserving privacy and auditability.
Historical roots and design inspiration
Buchman has pointed to the 15th‑century Medici Bank as a key inspiration. The Medici used interlinked credit relationships between branches to avoid constantly shipping large sums of money across Europe.
That early system of offsetting obligations became a foundation for European clearing practices. Cycles aims to apply a similar concept to modern on-chain markets, using cryptography and distributed infrastructure instead of manual ledgers.
Pilot launch with trading and prime brokerage firms
As part of its rollout, Cycles is launching a pilot platform called Cycles Prime in partnership with Lynq and FalconX. The pilot is being tested across a network that includes market makers, prime brokers and up to ten tier‑one trading firms.
Cycles Prime is targeted at institutional users, enabling them to privately net over-the-counter obligations. The intention is to lower liquidity needs and counterparty risk without requiring constant collateral movements or on-chain asset transfers for every trade.
If the pilot proves effective, it could allow firms to operate with smaller liquidity buffers by reducing the need to pre-fund each individual transaction.
Cycles Pay stablecoin to power settlement
Alongside the clearing protocol, Cycles is launching a stablecoin called Cycles Pay that connects directly to its clearing engine.
Cycles Pay is designed to:
- act as the settlement asset for the clearing protocol
- support on-chain payments that tie into the multilateral netting system
- enable private payments for individuals and businesses
- allow users to earn yield on balances while maintaining access to funds
By combining Cycles Prime and Cycles Pay, the startup aims to create a self-contained clearing and settlement layer where obligations can be netted and settled on-chain with minimal capital movement.
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