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The team behind Kine Protocol has raised $6 million in a funding round to launch a derivatives-focused decentralized exchange on Ethereum.

The startup said Tuesday that leading investors in the round are Alexander Pack, former managing partner at Dragonfly Capital, and Naval Ravikant, co-founder and former CEO of AngelList. Other participating investors include OKEx, CMS Holdings, Spartan Capital and NGC.

Dragonfly and Ravikant also invested in derivatives DEX dYdX, which raised $10 million in a recent Series B round.

“Compared to top centralized solutions, DeFi derivatives protocols are a strictly inferior experience. For one, traders usually suffer much higher slippage,” Kine said in a Tuesday press statement. 

The startup said it aims to feature synthetic funding rates and auto-deleveraging functions used in centralized exchange so that Kine can offer up to 100x leverage and cross-margining.

To encounter the transaction bottleneck on the Ethereum network, Kine said it will initially take a hybrid approach in that its trading engine will be run off-chain.

“Users only need to pay gas for staking and margin transfers, with zero gas consumption on trading activities,” the startup said. “Kine can support 10,000+ simultaneous trading users with 4,000+ transactions per second.” 

Kine’s CEO Wang Lei said that the goal is to launch the exchange in mid-March and anticipate migrating the trading engine on-chain on a Layer-2 rollup during Q2 this year.

“We need to ensure that the Layer-2 is secure and efficient enough,” Wang said. “Because our envisioned target trading volume is incomparable to other DeFi protocols so it needs to handle CeFi-level trading volume.”

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