Yellow Network, a decentralized clearing network for digital assets, has closed a $10 million seed round led by Ripple co-founder Chris Larsen. The company said it'll use the fund to help the company address key challenges in decentralized finance (DeFi) trading, including liquidity fragmentation, scalability, and counterparty risks.
Other notable investors include leading Ethereum developer Consensys, trading firm GSR, and crypto native VC firm Moonrock Capital.
Speaking with Decrypt, Larsen said Yellow Network’s ability to deliver fast trade execution and capital efficiency was a game-changer for high-speed trading firms.
“I’m proud to support Yellow Network as it tackles liquidity fragmentation in crypto trading and sets new standards for this evolving ecosystem," he said. "Yellow Network's decentralized clearing protocol is essential for the new players entering the space, and its ability to deliver fast trade execution and capital efficiency is a game-changer for high-speed trading firms."
Institutional investors and other traditional companies have long complained about fragmentation in the crypto space as a barrier to entry. Having to move liquidity from one network to another adds extra layers of complexity to trading crypto—one of the problems Yellow Network is looking to solve.
The raised funds will primarily be allocated towards research and development, with a focus on finalizing Yellow Network’s open-source protocol and advancing the Nitro state channel framework. Nitro will be a key component designed to enable near-zero latency in high-frequency and institutional trading. This technology is critical for making decentralized trading more efficient, particularly for cross-chain transactions.
"Nitro enables seamless interaction across different systems by integrating with Layer 1s, Layer 2s, custodian APIs, and private chains," said Louis Bellet, co-founder of Yellow Network told Decrypt.
Yellow Network’s decentralized clearing protocol is built to address liquidity fragmentation and scalability, which have long plagued DeFi trading. The protocol leverages state channel infrastructure and chain abstraction to facilitate high-speed trading with minimal counterparty risks.
"Yellow Network connects brokers and exchanges across multiple chains, creating a blockchain-agnostic mesh network that aggregates liquidity and lowers slippage,” Bellet said.
He further said that by integrating XRPL sidechain, Yellow Network enhances interoperability and liquidity, making it easier for traditional institutions to trade digital assets safely within decentralized ecosystems.
Moreover, as part of its broader growth strategy, Yellow Network is preparing for the launch of the $YELLOW token, slated for Q4 2024, which will play a central role in powering transactions and enhancing capital efficiency within the ecosystem.
A liquidity-locking campaign will accompany the token launch, for users to participate in the network’s expansion by supporting brokers with the necessary collateral to facilitate smoother trades across multiple chains.
Edited by Stacy Elliott.