Crypto options trading platform Sparrow has raised $3.5 million in Series A funding.
BitMEX parent HDR Group led the round, with participation from venture firms Signum Capital, Du Capital and FinLab EOS VC.
Singapore-based Sparrow offers bitcoin (BTC) and ether (ETH) options, which are settled via smart contracts. The exchange said its options are more liquid than over-the-counter (OTC) options and more customizable than exchange-traded options.
Sparrow leverages blockchain protocol EOSIO for its on-chain settlement layer, said Stefan Schuetze, managing director of FinLab EOS VC Fund, which focuses on investing in startups that utilize EOSIO protocol.
Sparrow’s Series A comes at an interesting time when the crypto derivatives market is growing sharply. Both bitcoin futures and options markets are growing faster than the bitcoin spot market, as The Block Research reported recently.
Last month, bitcoin futures saw volumes of $558 billion, while bitcoin options saw $3.1 billion worth of trades. The options market is still tiny compared to both futures and spot markets, but it is growing fast. The ratio between spot volume and options volume has increased from less than 0.009 to 0.029, which indicates that options volume is growing more quickly relative to spot volume.
Source: Skew, Kaiko, CoinGecko, CryptoCompare, The Block Research
Kenneth Yeo, CEO of Sparrow, said the exchange has also seen its volumes grow three times since the start of this year. While since its launch in June 2019, Sparrow has clocked in trading volume of over $150 million, said Yeo.
The crypto options space is seeing “significant growth,” said BitMEX CEO Arthur Hayes, adding that there are “a lot of untapped opportunities.” Notably, BitMEX itself doesn’t offer crypto options trading even though it had plans last year. Earlier this year, Hayes said crypto volatility is “very high,” and the higher the volatility, the more expensive the call or put option is.
With the fresh capital in place, Sparrow plans to offer more trading products. The Block has reached out to the exchange to know more and will update this story should we hear back.
© 2020 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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