Bain Capital Crypto leads $5.2 million seed round for DEX aggregator Flood

Flood, an Ethereum ecosystem-focused decentralized exchange aggregator, has raised $5.2 million in a seed funding round.

Bain Capital Crypto led the round, which included Archetype and Robot Ventures, Flood said Thursday. The round closed in the summer of 2023, Flood co-founder and CEO Francesco told The Block, adding that the round was structured as equity with token warrants. He declined to comment on the valuation, but said there was also a “small” funding round a year ago with the same investors and a few angel investors.

Francesco, a former software engineer at UMA Protocol, declined to share his and his co-founder Jan’s full names. Jan is a crypto developer and author of Neuronika, a rust machine learning library, Flood said.

As part of leading the round, Bain Capital Crypto has one observer seat on Flood, Francesco said.

What is flooding?

Flood is a DEX aggregator that is currently live on Arbitrum One and plans to expand to Ethereum, Base, and Optimism in the coming months.

Francesco said Flood’s main unique proposition is optimal routing that fulfills transactions mathematically and at the best prices. “Most aggregators are moving towards a request for quotation [request for quote] fashion model; We see that as a sub-optimal model because people can collude to execute trades at a bad price,” Francesco said.

In the future, Flood users will be able to independently verify that they received the best price with easy-to-calculate proof, Francesco said. “This is similar to what is done for zero-knowledge proofs; verifying the proof is easy, but producing it is not,” he said, adding, “We come up with some modified calculations.”

Flood also operates its own DEX, FloodSwap. Flood went live last November and has generated over $1.3 million in trading volume, according to trading volume a Dune data dashboard.

Throttle-free trading and MEV-free functions

Francesco said other key features of Flood include gasless and maximum recoverable value-free trading.

“Flood is completely intent-based, meaning users indicate their desired outcome, and fulfillers ensure their transactions are executed at the optimal price. This means users don’t have to send transactions themselves. Instead, they simply sign a message that does not require them to pay gas costs directly,” he noted. “And because our routing is optimal, transactions on Flood do not open the door to profitable backrunning.”

If there is arbitrage in the network when a Flood user trades, the Flood optimal fulfiller will try to grab it and return it to the users in the form of a “surplus,” Francesco said.

According to the Dune dashboard, Flood users captured over $8,000 in surplus last month.

While Flood remains focused on the Ethereum ecosystem in the near term, it is open to exploring more chains in the future, Francesco said.

Six people currently work for Flood, and with new funding available, the project plans to hire more people for business development and technical roles, Francesco said.

This article was updated after Flood said Bain Capital Crypto alone led the round, with Archetype participating.