Flood, a decentralized exchange integrator focused on the Ethereum ecosystem, has raised $5.2 million in a seed funding round.
Flood said Thursday that Bain Capital Crypto led the round, with participation from Archetype and Robot Ventures. Flood co-founder and CEO Francesco told The Block, adding that the round was scheduled to close in the summer of 2023 and consisted of equity with token warrants. He declined to comment on the valuation, but said there was also a “smaller” funding round a year ago with the same investors and several angel investors.
Francesco, a former software engineer at UMA Protocol, declined to reveal the names of himself and his co-founder, Jan. Jan is a cryptocurrency developer and author of Neuronika, a Rust machine learning library, Flood said.
Francesco said that as part of leading the round, Bain Capital Crypto secured one observer position for Flood.
What is a flood?
Flood is currently a DEX aggregator on Arbitrum One, with plans to expand to Ethereum, Base, and Optimism in the coming months.
Francesco said Flood’s core unique proposition is optimal routing, which mathematically fills transactions at the optimal price. “Most aggregators are moving to an RFQ (request for quote) model, which we see as a suboptimal option because people can collude to get a deal at a bad price,” Francesco said.
Flood users will be able to independently verify in the future whether they received the best price with easy-to-calculate proof, Francesco said. “This is similar to what is done in zero-knowledge proofs: verifying the proof is easy, but producing it is not,” he added. “We are coming up with some custom calculations.”
Flood also operates its own DEX, FloodSwap. Flood launched last November and had more than $1.3 million in trading volume, according to the Dune data dashboard.
Gas-free transactions and MEV-free features
Francesco said Flood’s other key features include gas-free and extractable maximum value-free trading.
“Flood is entirely intent-based, which means users say what outcome they want and fulfillment executes the transaction at the optimal price. This means users don’t have to send the transaction themselves. Instead, they just need to sign the message. “They asked me to pay the gas bill myself,” he said. “And because our routing is optimal, trading in Flood does not open the door to profitable backrunning.”
When a Flood user trades, if there is arbitrage on the network, the Flood optimal executor will attempt to capture it and return it to the user in the form of “surplus,” Francesco said.
According to the Dune dashboard, Flood users had a surplus of more than $8,000 last month.
Flood is focused on the Ethereum ecosystem in the short term, but is ready to explore more chains in the future, Francesco said.
Francesco said Flood currently employs six people and plans to hire more across its business development and engineering functions with the new funding.
This article was updated after Flood said Bain Capital Crypto independently led the round, with Archetype participating.
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