Exclusive: Polygon-backed D8X raises $1.5m with plan to bring DeFi to institutional crypto traders

Perp DEX protocol D8X secures $1.5 million in pre-seed funding from Polygon and other investors.
The exchange wants to bridge institutional investors to the DeFi space to trade crypto derivatives.

D8X, a Polygon-based perpetual futurures decentralised exchange, or perp DEX, has raised $1.5 million in pre-seed funding from investors led by Polygon Ventures.

The protocol will be entering a crowded perp DEX market when it launches in the second-half as there are already at least 60 exchanges.

D8X says it has an ace up its sleeve — a plan to bridge pro investors to DeFi and amid what the company sees as ample appetite among big banks and hedge funds for crypto derivatives.

‘Sufficient appetite’

“There definitely is sufficient appetite among institutional investors for crypto derivative trading — we have seen this thesis has been validated across CEXs over the last few years,” Polygon’s director of growth Hamzah Khan told DL News.

CEX stands for centralised exchanges like Coinbase and Binance. They are centrally controlled entities, unlike their DEX counterparts like GMX and Polynomial which run protocols on the blockchain.

Khan told DL News that traders fare poorly in the CEX perp trading arena due to “poor risk management and opaque balance sheets.”

“DeFi solves this by bringing transparency, self-custody, and better risk management,” Khan said.

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The perp DEX market is currently worth $1.3 billion based on total value locked, or TVL a metric that indicates the volume of investment in a DeFi protocol. GMX is the perp DEX market leader with $551 million in TVL, DefiLlama data shows.

CEX platforms still account for the biggest share of crypto derivatives trading with Binance, OKX, and Bybit the largest platform.

Operating in the already bloated space presents unique challenges for participants both from a technological and market penetration perspective.

D8X runs on Polygon’s zkEVM, an Ethereum scaling blockchain. This network presents some drawbacks for perp DEXes in the way it communicates with Ethereum.

This problem makes it expensive for protocols to run price oracles which are necessary for a trading protocol to function.

D8X co-founder Caspar Sauter told DL News that the issue does not affect the protocol as it “opted for a pull-oracle approach by embedding Pyth as its primary oracle solution.”

To share tips or information about DeFi please contact me at osato@dlnews.com.