Robert Leshner is a crypto pioneer, known for launching the highly successful DeFi protocol Compound and introducing many to the world of automated, decentralized trading. Now, he is building out a new venture, Superstate, that aims to take the best features of DeFi and apply them to the world of mainstream finance.
On Wednesday, Superstate announced it has raised a $14 million Series A round led by Distributed Global and CoinFund. The company declined to disclose a valuation, which comes after Superstate raised a $4 million seed round in June.
Superstate plans to use the money to build out its team and develop private funds that will let institutional investors avail themselves of the "programmable" features familiar to the crypto world. In practice, this will entail letting the investors 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 will be months or more until any such products go live. For now, he says, Superstate is focused on not only building the financial plumbing to make this happen, but also to obtain the requisite regulatory clearances to offer products in the U.S.
The idea of applying blockchains and DeFi-style tools to conventional finance is not a new one. In 2018, startups like Harbor touted "security tokens"—digital assets backed by real-world assets—as a killer app for crypto that would make it easy to trade real estate and a wide variety of other assets on the blockchain. While this idea might have had an intuitive appeal, it never caught on at the time, which raises the question of whether Superstate will fare any better.
Leshner is confident it will, in large part because the crypto and investing landscape is very different than it was five years ago. He says many investors are not only familiar with the benefits of exchanging assets on a blockchain but want to use them for mainstream 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 to trade were typically limited to exotic crypto tokens.
"Today, the number of developers is 100 times what it was at the time. The world is ready for tokenized funds," said Leshner.
Recent developments in the world of banking suggest he's likely correct. This includes the likes of JPMorgan and HSBC building out blockchain services to trade equities and commodities. The pace remains incremental but does support Leshner's thesis that professional investors are more open to integrate crypto-style tools as part of their operations.
Superstate is aiming to launch its first by early next year provided it can obtain the requisite SEC permissions. Leshner says its initial suite of products will be built on Ethereum but that it may add other blockchains down the road.
“Superstate’s approach to tokenization will bridge the gap between high-quality compliant financial products and the massive advantages and innovation DeFi is poised to offer to traditional finance,” CoinFund CEO Jake Brukhman said in a statement.
Other investors in Superstate's Series A include Breyer Capital, Galaxy, Arrington Capital, Road Capital, CMT Digital, Folius Ventures, Nascent, Hack VC, Modular Capital, and Department of XYZ.
