Ethan Buchman is Founder and CEO of Cycles and one of the original architects of the Cosmos blockchain ecosystem. He co-founded Tendermint Inc., led development of the Tendermint BFT consensus engine, and contributed to the IBC interoperability protocol. Buchman has raised $6.4 million to commercialise a clearing model that net-settles obligations across multiple parties simultaneously, cutting the amount of capital that actually needs to move. Blockchange Ventures led the round, with participation from Coinbase Ventures, whose 2026 investment focus includes DeFi and blockchain infrastructure, Compound VC, Primitive Ventures, and individual angels. The raise brings Cycles' total funding to $8.7 million, following a $2.3 million pre-seed in 2025.

The company is building two products. Cycles Prime targets institutional over-the-counter (OTC) trading desks, letting counterparties net their obligations against each other in a privacy-preserving environment before settling only the residual difference. Cycles Pay is a stablecoin payments application aimed at broader business use, featuring invoicing and expense management tools, with credit features in development. Crypto exchange FalconX and Lynq, a digital-asset settlement network developed by Arca Labs, Tassat Group, and tZERO, have signed on as anchor partners for the Cycles Prime launch.

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The Problem: Trillions Sitting Idle

The core inefficiency Cycles targets is pre-funded settlement. Under current infrastructure, including SWIFT and standard bilateral OTC clearing arrangements, institutions must park capital at multiple venues days before a trade settles. Finery Markets' 2026 State of Crypto OTC report puts the global total of capital effectively frozen in this way at roughly $27 trillion.

The cost of that inefficiency became visible on October 10, 2025, when $19 billion in crypto leverage was liquidated in a single day, the largest such event on record. Seventy percent of those forced liquidations occurred within 40 minutes. Some analysts and critics argue that settlement architecture, not just market volatility, contributed to the speed and severity of that cascade.

Stablecoins have meanwhile become the dominant medium for institutional crypto settlement, accounting for 78 percent of volume in 2025, up from 23 percent the prior year, according to the same Finery Markets data. Institutional spot OTC volume grew 109 percent year-over-year in 2025, compared with just 9 percent growth across the top 20 centralised exchanges. Cycles argues that clearing infrastructure has not kept pace with this growth.

"Legacy settlement rails weren't built for today's 24/7 global markets," said Matt Lepow, Trade Ops Lead at FalconX, in a statement accompanying the announcement.

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How the Technology Works

Cycles uses zero-knowledge proofs (ZKPs) and trusted execution environments (TEEs) to allow multiple parties to net their obligations without exposing the underlying positions to each other or to third parties. A zero-knowledge proof lets one party mathematically demonstrate that a statement is true without revealing the underlying data. A trusted execution environment is a secure hardware enclave that processes sensitive computations in isolation. Together, these allow Cycles to identify offsetting obligations across a network of participants and collapse them into a single net settlement, without any party seeing anyone else's books.

The approach is not entirely new as a concept. Buchman's founding whitepaper drew on historical examples of decentralised clearing networks that pre-date central banks, where participants settled debts through mutual netting rather than cash transfers. The technological layer is new; the underlying logic is several centuries old.

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Outside the US, the Stakes Are Higher

For readers in Lagos, Nairobi, Mumbai, or Dhaka, the institutional clearing story matters less than what Cycles Pay could eventually become. Across sub-Saharan Africa and South Asia, businesses managing cross-border trade already rely heavily on stablecoins precisely because traditional banking rails are slow and expensive. India is the world's top remittance recipient. Nigeria, Kenya, and South Africa have each developed crypto regulatory frameworks that neighbouring countries are watching closely.

South Africa's 2026 budget plans to bring crypto assets explicitly into its capital flow management regime, including cross-border movement rules, a signal that regulators now treat crypto settlement infrastructure as a policy question rather than a fringe issue. At least eight African countries have introduced crypto-specific regulation as of this year.

A clearing layer that nets stablecoin obligations across multiple parties, without requiring a correspondent bank or pre-funded account at each end, could materially reduce working capital requirements for regional fintech firms. Cycles frames itself as open infrastructure rather than a closed product, meaning developers could in principle integrate its clearing primitives into existing payment rails or lending protocols. The ZKP and TEE privacy architecture also aligns reasonably well with data protection frameworks such as India's DPDP Act and South Africa's POPIA.

"Clearing is a financial superpower that has historically only been available to large financial institutions," Buchman said in a statement. "Our goal is to bring that superpower to everyone else."

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What Comes Next

Cycles has not yet launched on a public mainnet, so on-chain metrics are not yet available. The company is competing in a space that includes Yellow Network, which has received backing from crypto infrastructure investors and is building bilateral clearing infrastructure focused on exchange liquidity. Cycles' multilateral netting model and its explicit intermediary-free design are the main points of differentiation it is leading with.

Rob Schmults, General Partner at Blockchange Ventures, described Cycles as having the potential to become "a category-defining standard for how value is settled and netted across entire ecosystems." Whether the product reaches the corridors where that framing carries the most weight will depend on how aggressively the team pursues integrations beyond institutional OTC desks.