Cycles: Crypto Clearing Network
#66
TLDR
Cycles is a clearing network for crypto markets and stablecoin payments. It runs a multilateral netting system that finds offsetting obligations among participants so that less money needs to move to discharge the same amount of debt. It is not a central counterparty, not a custodian, and not a settlement venue — it never takes possession of assets, no contracts are novated, and final settlement of net balances happens outside the network.
Key facts: incubated at Informal Systems and spun out as a standalone company in May 2025; led by Cosmos co-founder Ethan Buchman; total funding of US$8.7 million following a US$6.4 million seed round announced May 21, 2026; two products — Cycles Prime (institutional netting, launching with Lynq and FalconX as anchor partners) and Cycles Pay (stablecoin payments app, in beta).
Origins
Cycles began as a research project inside Informal Systems, the blockchain firm behind core Cosmos infrastructure, with partial funding from the Interchain Foundation in 2022. The whitepaper — “Cycles Protocol: A Peer-to-Peer Electronic Clearing System” — was published in November 2024, authored by Ethan Buchman with Paolo Dini, Shoaib Ahmed, Andrew Miller, and Tomaž Fleischman. Its academic lineage runs through Dini and Fleischman’s work on Multilateral Trade Credit Set-off (MTCS), an algorithm validated on anonymized Italian data covering 1.28 million invoices across 760,000 companies. The whitepaper’s motivating problem was small-business working capital and late payments; the company’s first commercial markets are crypto trading and stablecoin payments. Informal spun Cycles out in May 2025, alongside a US$2.3 million pre-seed and the launch of the Cycles Prime pilot.
What It Is and Isn’t
Cycles operates the layer between trade execution and settlement. Participants submit bilateral obligations to a shared network; a graph algorithm finds closed loops and chains that can be set off against each other; participants receive legally meaningful set-off notices; and only the remaining net balances need to be settled — off-platform, through whatever rails the parties already use. Privacy is maintained by running the clearing computation inside a Trusted Execution Environment (built on Quartz, the company’s open-source framework), with zero-knowledge proofs verifying that results are correct without revealing the obligation graph.
What it isn’t: Cycles is not a clearing house in the traditional sense — there is no central counterparty, no novation of contracts, no margining, and no collateral. It does not custody assets or move money. That also means it provides no default guarantee: net positions that survive clearing still carry bilateral counterparty risk and must be settled by the parties themselves. The company has not announced any financial-services licenses or registrations.
Market Position
Cycles sits in a small but active field building post-trade infrastructure for digital assets, where much of the market still settles bilaterally on a gross, prefunded basis. Its positioning is distinct: where competitors like ClearToken pursue a regulated central-counterparty model, and custody networks like Copper’s ClearLoop solve settlement through segregated custody, Cycles offers netting without taking on either role — and partners with settlement networks rather than competing with them. The October 10, 2025 deleveraging event, in which more than US$19 billion in crypto leverage was liquidated in roughly a day, is the company’s go-to illustration of what gross-settled markets cost. The longer-term market described in the whitepaper — netting trade credit for small businesses — remains on the roadmap rather than in the product line.
Product Portfolio
Cycles Prime is the institutional product: trading firms record bilateral OTC obligations via web app or API, counterparties approve them, and at clearing time the network identifies nettable positions and issues daily journal and set-off notices. Residuals settle through existing rails. Prime is in an invitation-only pilot, launching with Lynq and FalconX as anchor partners. Lynq — the real-time settlement network operated by tZERO, Arca Labs, and Tassat, with U.S. Bank as cash custodian — sits downstream of Cycles as a venue where net balances can settle.
Cycles Pay is a stablecoin payments app for individuals and businesses, in public beta on web, iOS, and Android. It combines shielded transactions (balances and counterparties are private by default), automatic yield on idle balances, and business tooling for invoicing and expenses, with payments routed through the same clearing engine. Fiat payments are listed as coming soon via an “integrated virtual bank account” that converts to and from fiat on entry and exit; the company has not disclosed which regulated institution provides this. Credit features for businesses are planned.
Pricing: the Prime pilot is free; the company says future pricing will likely combine a base annual membership fee with basis points on amounts cleared.
Traction
Disclosed traction is early-stage and largely qualitative. Cycles Prime has two named anchor partners (Lynq and FalconX, with FalconX confirming its role as a pilot partner); Cycles Pay’s beta is live with a points program for early users. The company has not published cleared volumes, customer counts, or revenue figures.
Funding
Total raised: US$8.7 million. The release does not specify currency; figures are reported here in U.S. dollars consistent with trade coverage.
Leadership
Ethan Buchman — Co-founder & CEO. Co-founder of Cosmos and Tendermint, CEO of Informal Systems, and previously with the Interchain Foundation; Toronto-raised, with a graduate background in biophysics from the University of Guelph. Buchman has framed clearing as “a financial superpower that has historically only been available to large financial institutions.”
Beyond Buchman, Cycles has not publicly detailed its executive team. The whitepaper’s co-authors include the MTCS researchers Paolo Dini and Tomaž Fleischman and security researcher Andrew Miller.
Competitive Map
Lynq appears here for placement rather than rivalry — it is a Cycles Prime anchor partner and operates downstream at the settlement layer. Cycles’ nearest direct comparison is ClearToken, which addresses the same gross-settlement problem through the opposite architecture: a regulated central counterparty.
Regulatory
Cycles has not announced any licenses, registrations, or pending applications. Cycles Prime is structured to operate before settlement — no custody, no asset movement, no novation — relying on set-off notices grounded in private obligation law, an approach the whitepaper frames as deliberately distinct from regulated clearing-house structures. The open regulatory question is Cycles Pay’s fiat functionality: virtual accounts converting to and from fiat imply a regulated banking or money-services partner in each operating market, none yet named. For Canadian readers: no FINTRAC money services business registration or Bank of Canada Retail Payment Activities Act registration has been announced, and the company has not stated whether CAD support is planned.
Recent Milestones
May 21, 2026 — US$6.4M seed round led by Blockchange Ventures; Cycles Prime launching with Lynq and FalconX as anchor partners; total funding reaches US$8.7M.
2025–2026 — Cycles Pay public beta launches on web, iOS, and Android; fiat payments announced as coming soon.
May 2025 — Cycles spins out of Informal Systems; Cycles Prime pilot launches alongside a US$2.3M pre-seed; Quartz TEE framework released as open source.
November 2024 — Whitepaper published.
Footprint
Headquartered in Toronto, Ontario. Headcount is not disclosed; the company is hiring. Cycles Prime targets institutional trading firms globally; Cycles Pay’s beta is available via public app stores, with business features gated behind a private beta.
Outlook
Trackable items over the next 6–12 months: whether Cycles Prime moves from invitation-only pilot to general availability, and whether the company discloses cleared volumes; the launch of Cycles Pay’s fiat payments and the identity of the regulated institution behind its virtual accounts; whether announced credit features for Pay business users ship; whether formal pricing (membership plus basis points on cleared amounts) replaces the free pilot; whether any regulatory registrations appear — including, for Canadian relevance, a FINTRAC MSB listing; and whether the anchor-partner roster expands beyond Lynq and FalconX.
Sources
Cycles whitepaper — https://cycles.money/whitepaper.pdf
Cycles Prime product page — https://cycles.money/prime
Cycles Pay product page — https://cycles.money/pay
Funding announcement (CNW/Newswire, May 21, 2026) — https://www.newswire.ca/news-releases/cycles-raises-6-4m-to-build-the-open-clearing-network-for-on-chain-finance-807999488.html
Cointelegraph on the whitepaper (Nov 2024) — https://cointelegraph.com/news/cosmos-founder-pitches-peer-to-peer-clearing-system
The Logic on Informal Systems spinouts — https://thelogic.co/briefing/circle-acquires-spinout-of-toronto-crypto-firm-informal-systems/
Bitget/Cryptonews on the Prime launch and pre-seed (May 2025) — https://www.bitget.com/news/detail/12560604753118
Informal Systems blog, whitepaper announcement — https://informal.systems/blog/cycles-whitepaper
Ethan Buchman bio — https://ebuchman.github.io/about/
Markets Media on ClearToken — https://www.marketsmedia.com/cleartoken-launches-cls-type-settlement-for-crypto/
Traders Magazine on Copper ClearLoop — https://www.tradersmagazine.com/departments/clearing/copper-launches-clearloop-crypto-off-exchange-settlement-tool/
American Banker on Lynq — https://www.americanbanker.com/news/arca-tassat-tzero-lead-joint-creation-of-tokenized-treasury-fund
Cycles careers (Greenhouse) — https://job-boards.greenhouse.io/cycles