Cycles Launches Cycles Prime, Aims to Reduce Capital Strain in Crypto Trading

Cycles, a privacy-preserving clearing protocol developed by Informal Systems, has launched its first clearing application, Cycles Prime. The platform is designed to offer a private, peer-to-peer clearing system with a new web app and API, allowing trading firms to clear large amounts of debt with less capital. The platform utilizes Trusted Execution Environment (TEE) for privacy, powered by Quartz, Cycles’ open-source framework, and zero-knowledge proofs to verify correctness.

Cycles Prime is positioned as a decentralized clearing house that reduces outstanding short-term obligations before final settlement. Trading firms can net and clear outstanding payments without collateral, escrow, or a central counterparty. This means there is no need for posting collateral, substituting counterparty, or changing settlement flows. The product includes a daily journal and set-off reports to simplify settlement and integrates with existing prime brokerage, OTC, and trade execution workflows. Companies can decide what to include in the system, providing flexibility in its use.

The platform is currently available through an invitation-only pilot program for institutional crypto trading firms. Participants in the pilot program receive personalized onboarding, access to product teams, and a say in the product’s future development. The team behind Cycles Prime describes it as a low-overhead complement to existing settlement solutions, relieving liquidity stress while preserving existing trading relationships.

In addition to the launch of Cycles Prime, Cycles has also announced a pre-seed funding round. The round was co-led by CMCC Global and Maven 11, with participation from Nascent, investors, and angels. The company will use the funds for its development, expanding the pilot, and onboarding institutional participants.

Cycles Prime comes at a time when trading firms are seeking solutions to optimize capital use without taking on more systemic or counterparty risks. The platform addresses the issue of credit scarcity in the crypto industry, which has become a significant challenge since the fall of massive companies. Many companies still rely on collateral-heavy processes to manage short-term trades, trapping liquidity and increasing systemic risk. Cycles Prime aims to lower capital strain while working within the systems firms already use.

CEO Ethan Buchman, a co-founder of Cosmos and Informal Systems, highlights that clearing between trading firms is where the market faces daily risk and capital inefficiency. Cycles aims to create a foundation for a sustainable credit market to re-emerge by addressing these issues.