Crypto infrastructure startup Cycles has successfully completed a $6.4 million seed funding round led by Blockchainje Ventures. The round included participation from Coinbase Ventures, Compound VC, and Primitive Ventures, along with other unnamed backers. According to the company, this latest funding brings Cycles' total funding to $8.7 million since its inception, following a $2.3 million pre-seed round in 2025. The startup was founded by Ethan Buchman, a co-creator of the Cosmos blockchain, after spinning out of Informal Systems. The involvement of Coinbase Ventures, the investment arm of one of the largest U.S. crypto exchanges, signals growing interest in infrastructure solutions that can support mainstream adoption.
The company is addressing what it describes as a structural inefficiency in crypto markets where too much capital is trapped across exchanges, counterparties and venues due to overcollateralization requirements and fragmented settlement pools. Cycles proposes replacing this model with a private clearing network that nets obligations across participants before final settlement, reducing both counterparty exposure and liquidity consumption. This approach aims to improve capital efficiency by offsetting obligations among multiple participants rather than requiring individual capital buffers for each bilateral exposure. The system calculates net balances rather than moving full amounts between counterparties, cutting liquidity requirements and counterparty exposure in the process. The consequences of operating without clearing infrastructure are evident - on October 10, 2025, more than $19 billion in crypto leverage was liquidated in roughly a single day - the largest single-day deleveraging event in crypto history, with 70% of forced liquidations occurring in just 40 minutes according to Amberdata and FTI Consulting.
At the core of Cycles' solution is a clearing mechanism that utilizes zero-knowledge proofs and trusted execution environments (TEEs) to enable counterparties to coordinate sensitive financial activities without exposing underlying data. Zero-knowledge proofs allow one party to prove claim validity without revealing underlying information, while TEEs provide hardware-isolated environments for confidential computation. The company also employs multilateral clearing technology to privately net obligations across participants. This privacy-preserving approach addresses crypto firms' reluctance to reveal trading strategies, balances, or counterparty relationships while still benefiting from shared coordination. Cycles is building a unified clearing network that serves as a base layer for an ecosystem of capital-efficient financial applications, initially launching two products built on a shared clearing architecture.
Cycles has launched its first institutional product, Cycles Prime, which allows OTC trading firms to settle obligations privately without moving collateral or changing counterparties. The product launches with Lynq and FalconX as anchor partners. A second product, Cycles Pay, targets businesses and individuals, enabling stablecoin payments, invoice management, and balance optimization through the same clearing engine. Traditional financial institutions use clearing systems to reduce the amount of money that needs to move between counterparties, instead of every firm sending full payments back and forth, clearing offsets obligations so that only the net difference needs to move. However, crypto markets largely operate without this infrastructure today, creating liquidity bottlenecks, higher counterparty risk, and settlement inefficiencies across billions in daily trading volume. FalconX trade operations lead Matt Lepow emphasized the partnership's significance: "Legacy settlement rails weren't built for today's 24/7 global markets. We support Cycles' mission to create a unified clearing layer for on-chain finance, an important step in modernizing global financial infrastructure." The funding reflects continued venture capital interest in backend crypto infrastructure, with Blockchange Ventures' Rob Schmults noting that Cycles "can become a category-defining standard for how value is settled and netted across entire ecosystems and markets."
