Secured over $60 million in funding from Dragonfly, Sequoia, and others, learn about the on-chain derivatives protocol Variational | CryptoSeed

Author: momo, ChainCatcher

Recently, the decentralized derivatives trading platform Variational announced the completion of a $50 million Series A funding round led by Dragonfly. Including three previous funding rounds, Variational has raised a total of $61.8 million. The investment lineup behind it is quite luxurious, including well-known institutions such as Sequoia Capital, Coinbase Ventures, Bain Capital Crypto, Hack VC, and others.

According to data from DeFiLlama, the open interest (OI) on Variational has exceeded $810 million, which still has a significant gap compared to Hyperliquid's $9.4 billion, but OI currently ranks fourth among on-chain derivatives protocols.

In the fiercely competitive decentralized derivatives space, why has Variational been able to continuously attract top institutional bets? What is the team's background? What are the differentiated paths? This article provides a brief overview.

What is the team's background?

From the perspective of team background and entrepreneurial experience, Variational and Hyperliquid have many similarities; both are graduates from prestigious universities, come from quantitative trading backgrounds, and transitioned from founding quantitative funds to building on-chain derivatives platforms.

However, unlike Hyperliquid's early mysterious and anonymous team approach, Variational disclosed the backgrounds and entrepreneurial experiences of its founding team in its white paper.

Variational was co-founded by Lucas Schuermann and Edward Yu. CEO Lucas graduated from Columbia University and was primarily responsible for trading system engineering architecture; Edward Yu is a quantitative analyst with a Chinese background. The two met while studying and researching in the engineering department at Columbia University and co-founded the quantitative hedge fund Qu Capital in 2017.

In 2019, Qu Capital was acquired by Digital Currency Group. Subsequently, the two joined Genesis Trading: Lucas served as Vice President of Engineering, and Edward Yu served as Vice President of Quantitative Trading.

According to the white paper, before leaving Genesis in 2021, the team they were part of had handled trading volumes of several hundred billion dollars. After leaving, they founded their proprietary trading company Variational and completed a $10 million funding round.

In the following years, the team operated proprietary trading strategies while completing trading interface integrations with mainstream CEX and DEX. Later, the team began to develop and operate the Variational Protocol based on its trading business and system experience.

Additionally, members of Variational's development and quantitative team come from technology and quantitative institutions such as Google, Meta, Virtu Financial, IMC Trading, and Jane Street. The white paper states that core technical team members generally have over ten years of experience in software engineering or quantitative research.

What are the product features? How does it differ from Hyperliquid?

From the Variational trading interface, the differences from Hyperliquid are not very significant. The platform has launched approximately 450 trading pairs, mainly covering two categories of assets: cryptocurrencies and TradFi, providing users with up to 50 times leverage trading capability. The TradFi segment is currently in the beta testing phase, and according to official disclosures, the TradFi market will launch over 100 trading pairs.

However, Variational stated in its press release that it has a clearly differentiated positioning from Hyperliquid.

Variational mentioned that its model is more like a brokerage rather than another Hyperliquid-style exchange. Its target users are not limited to crypto-native traders but aim to provide a trading experience for on-chain derivatives that is closer to traditional markets through zero-fee trading and liquidity aggregation.

Currently, Variational operates on Arbitrum, adopting a dual product line model. The Omni version is primarily aimed at retail users, focusing on aggregating liquidity from multiple sources for perpetual contract trading products, while Pro targets institutional over-the-counter derivatives trading.

The biggest difference from Hyperliquid lies in the order matching and liquidity mechanism. Hyperliquid relies on its own L1 chain and a public central limit order book (CLOB), where market makers or HLP vaults within the protocol compete for quotes, and traders must pay maker/taker fees. In contrast, Variational uses an RFQ (Request for Quote) model, with a single liquidity provider as the counterparty, not relying on internal market making on-chain but aggregating external liquidity in real-time from CEX, DEX, over-the-counter trading channels, and traditional financial market makers, managing risk through hedging.

The reason for choosing this differentiated path is that Variational CEO Lucas believes that on-chain liquidity is still far behind traditional trading venues like CME, and the order book model has a "cold start" problem. By aggregating liquidity externally, there is no need to rebuild liquidity from scratch on-chain.

What stage is it currently in? What participation opportunities are there?

Variational is currently still in the Pre-TGE stage, and the $VAR token has not yet been issued. The project had planned to conduct its TGE in Q1 2025, but this has been postponed, and the official has not yet announced a new exact TGE date.

In December 2025, Variational launched the Omni Points rewards system. The official stated that 50% of the $VAR supply will be used for community incentives, gradually distributed through various mechanisms such as Points, rather than a one-time airdrop.

In terms of points, 3 million points have been retroactively awarded to early users, and points will be distributed every Friday thereafter, calculated based on the trading snapshot from the previous week. The points program will conclude no later than Q3 2026.

Currently, the main participation opportunity is to engage in perpetual contract trading on the Omni platform, with trading volume being the core factor for earning points. Holding positions and referring others can also earn additional point bonuses.