Compound founder’s new firm Superstate raises $14 million to modernize investing with crypto-style tools
Robert Leshner is a crypto pioneer, known for launching the highly successful DeFi Compound protocol and introducing many people to the world of automated and decentralized trading. Today he is building a new company, SuperState, which aims to take the best features of DeFi and apply them to the world of traditional finance.
On Wednesday, Superstate announced that it had raised a $14 million Series A round led by Distributed Global and CoinFund. The company declined to disclose a valuation, after SuperState raised a $4 million seed round in June.
Superstate plans to use the money to build its team and develop private funds that will allow institutional investors to take advantage of the “programmable” features familiar to the crypto world. In practice, this will involve allowing investors to obtain tokenized versions of bonds or other common assets, and trade or lend them on Uniswap-like platforms, services that rely on smart contracts to carry out interest-bearing transactions.
In an interview with Fortune, Leshner said it would be months or more before such products come online. For now, he says, Superstate is focused not only on putting the financial plumbing in place to make this happen, but also on obtaining the regulatory approvals required to offer products in the United States.
The idea of applying blockchains and DeFi-like tools to conventional finance is not new. In 2018, startups like Harbor touted “security tokens”– digital assets backed by real-world assets – as a cool app for crypto that would facilitate the trading of real estate and a wide variety of other assets on the blockchain. While this idea may have had intuitive appeal, it never caught on at the time, raising the question of whether Superstate will fare any better.
Leshner is confident that will be the case, largely because the crypto and investing landscape is very different than it was five years ago. He claims that many investors are not only familiar with the benefits of trading assets on a blockchain, but also want to use them for traditional trading.
Leshner adds that, in the past, traditional investors who were familiar with blockchain stayed away because blockchain trading infrastructure was limited and because the assets available for trading were generally limited to exotic crypto tokens.
“Today, the number of developers is 100 times what it was back then. The world is ready for token funds,” Leshner said.
Recent developments in the banking world suggest he is probably right. This includes people like J.P. Morgan and HSBC is developing blockchain services for trading stocks and commodities. The pace remains gradual but supports Leshner’s thesis that professional investors are more willing to integrate crypto-type tools into their operations.
Superstreet aims to launch its first by early next year, provided it can obtain the required SEC clearances. Leshner says its initial suite of products will be built on Ethereum, but may add other blockchains in the future.
“Superstate’s approach to tokenization will bridge the gap between high-quality compliant financial products and the enormous benefits and innovations that DeFi is poised to deliver to traditional finance,” said CoinFund CEO Jake Brukhman, in a press release.
Other Superstreet Series A investors include Breyer Capital, Galaxy, Arrington Capital, Road Capital, CMT Digital, Folius Ventures, Nascent, Hack VC, Modular Capital and Department of XYZ.
