Exclusive: Two Former Citadel Quants Raise $10M to Make Funding-Rate Arbitrage a One-Tap Trade.
PrepNexus, a startup that automates funding-rate arbitrage across crypto exchanges, has raised $10 million in seed funding led by Pantera Capital, with participation from a group of angel investors drawn from crypto market-making and trading desks. The company declined to disclose its valuation.
The round closes roughly eighteen months after co-founders Ethan Kwon and Priya Raghavan walked away from Citadel, where Kwon built execution systems and Raghavan ran systematic macro strategies. Between them, they had spent the better part of a decade on the unglamorous side of markets: the plumbing. PrepNexus is their attempt to sell that plumbing as a product.
“We were the ones getting paged at 3 a.m.”
Funding-rate arbitrage is crypto’s worst-kept secret. Buy spot, short the perpetual future, collect the funding payment every eight hours, stay delta-neutral. When funding runs hot — and in this market it often does — the trade prints a yield that looks absurd next to anything in traditional fixed income.
It is also tedious to run. Capital sits fragmented across a half-dozen venues, each with its own margin rules, fee schedule, liquidation engine, and API that breaks on a Tuesday. Rebalancing is manual. So is monitoring. So is the tax reconciliation six months later.
“We were the ones getting paged at 3 a.m. because a leg got liquidated on a venue nobody was watching,” Raghavan said. “The strategy is simple. Operating it is not.”
The two met on a cross-asset desk in 2019 and spent years running their own capital through the same trade on nights and weekends. What they built for themselves — a router that split orders across venues, a margin engine that kept leverage in a narrow band, a rebalancer designed to never unwind a position at the worst possible moment — eventually attracted attention from colleagues who wanted the same tooling.
“We kept getting asked for access,” Kwon said. “At some point it stopped being a side project.”
Both left in early 2025. PrepNexus opened to a waitlist this spring.
What the app actually does
Users deposit once. PrepNexus allocates capital across connected exchanges, opens matched legs — long spot, short perpetual — and maintains the hedge as prices move. Funding payments land in the account. The rebalancing, margin management, and venue risk limits run in the background.
The company says it touches nothing directional. PrepNexus does not take a view on whether bitcoin goes up or down; it only cares whether the funding rate it is collecting exceeds the fees, borrow costs, and slippage required to collect it.
That framing matters, because it is precisely how the pitch can go wrong. The trade is not risk-free, and the failure modes are unattractive: funding can flip negative and bleed the position, exchanges can change margin requirements overnight, and a single venue blowup can wipe out collateral that has nothing to do with the trade’s direction. PrepNexus says it caps exposure per venue and holds a cash buffer, but no automated system has yet survived a top-five exchange failure.
“[Pantera partner], who led the deal for Pantera, framed the bet as one about distribution rather than invention. The trade is well understood by professionals,” they said. “Nobody has built a clean consumer interface for it. That’s the gap.”
A crowded lane, for a reason
PrepNexus is not entering empty space. Ethena turned the same underlying economics into a multi-billion-dollar asset, and a crowded field of quant funds and yield aggregators already run basis strategies at institutional scale. Several exchanges now offer one-click versions of the trade for their own users, though those tools only work on a single venue and leave the trader carrying that venue’s risk.
The bulls argue the market is big enough that the fight will be over trust and interface, not strategy. Perpetual futures volume continues to dwarf spot across major venues, and funding has quietly become the single largest source of structural yield in crypto — a fact that retail traders are only now discovering, largely because stablecoin yields have compressed.
The bears argue something else: that the easy money in this trade is a function of a bull market’s leverage demand, and that a sustained downturn will turn funding negative just as retail arrives. Both things can be true.
What’s next
PrepNexus plans to use the funding to expand venue coverage, hire on the compliance and risk side, and build out tax reporting — the least glamorous feature on the roadmap and, by Kwon’s own admission, the one that will decide whether users stay.
The company says it will begin onboarding off the waitlist in the fourth quarter, and will publish its venue-level exposure limits alongside. Raghavan is blunt about what they are and are not selling.
“If you want to trade, go trade,” she said. “We’re selling the part you don’t want to do at 3 a.m.”
