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As the crypto landscape becomes littered with a growing number of layer-1 and layer-2 blockchains, the prominent DeFi platform Drift is doubling down on Solana, announcing a $25 million Series B funding round led by the prominent crypto venture firm Multicoin Capital.
In an exclusive interview with FortuneDrift Labs cofounder Cindy Leow said her goal is to build Drift into the “Robinhood of crypto” by building out a suite of financial services tools, including spot and derivatives trading and a prediction market, all on top of Solana.
“We see ourselves as building out the foundations of an on-chain financial institution,” Leow said. “We’re looking to expand our product speed even further.”
Cross-margining
Founded in 2021 as a derivatives exchange on Solana, Drift differs from centralized exchanges such as Coinbase and Binance, operating entirely via a permissionless structure on the blockchain. This means no one controls funds except for users themselves.
While Solana also hosts other decentralized exchanges, including Orca, Leow said that Drift stands out due to its depth of liquidity and its different products, which include borrow and lend protocols and spot trading. As is common in crypto, Drift runs separately from an affiliated corporate entity, in this case Drift Labs. The latter helps develop the software, and the protocol itself, which is governed through an associated token (DRIFT) and a decentralized autonomous organization, or DAO.
The most popular product on Drift is still a form of derivative called a perpetual future, which is a type of contract betting on the future price of an asset without an expiry date. It’s a complex, tightly regulated product that is mostly used by more sophisticated or accredited investors—Drift geoblocks access to perpetual futures in the U.S., where only spot trading is available.
According to Leow, Drift’s main innovation comes from its cross-margin ability. Put simply, users can put down different types of assets, from dollar-backed stablecoins to Solana to wrapped Bitcoin, as collateral for their trades, thereby creating a more unified and efficient system because users do not have to constantly move between different types of cryptocurrencies. Drift offers cross-margin for 25 assets, including popular DeFi tokens on Solana.
The cross-margin functionality underlies a number of growing Drift products, including the borrow/lend protocol and a prediction market intended to challenge popular platforms like Polymarket. Leow said that this diverse suite of offerings, all built within the same ecosystem, means that users could take positions between different products, such as going long Bitcoin and shorting the likelihood of Trump winning the election. “These are really unique to being built on a blockchain,” Leow told Fortune.
SOL-ar power
Since its launch in 2020, Solana has experienced a turbulent ride. The blockchain is the third-largest by total volume locked and the price of its native token has risen over the past year, though it has declined precipitously since a peak in late 2021, before the collapse of FTX. And despite its promises of swift transactions and low fees, Solana has suffered a series of outages alongside accusations of centralization.
Still, Leow said that Solana is the best bet for a platform like Drift, especially as its main competitor, Ethereum, experiences an influx of layer-2s, which sit atop the main blockchain in order to create batches of low-cost transactions. “When we’re thinking about a future where every single asset will be tokenized,” she said, “We don’t think that an issuer is actually going to look at Ethereum.”
“They’re probably going to look at the chain that has the highest amount of activity, the highest amount of users, and the most seamless integration,” she added.
Drift’s growth—including more than 200,000 users and over $50 billion in cumulative volume to date—attracted top investors such as Multicoin to participate in the all-token Series B, bringing Drift’s total funding to $52.5 million. The company plans to double its headcount from 25 to 50 within the next year.
With Leow at the helm, Drift also has the rare distinction of a female-led crypto company, though she said she hasn’t faced discrimination in the male-dominated industry. “We have one of the highest gender diversities in crypto,” she said, adding that about half of Drift’s leadership team is comprised of women.
Blockchain Capital, Primitive Ventures, and Folius Ventures are also participating in the round.