Cosmos Co-founder Ethan Buchman's Multi-party Settlement Startup 'Cycle' Raises $6.4 Million

Cycles, a startup founded by Cosmos Network co-founder Ethan Buchman, has secured $6.4 million in new funding. Announced on May 21, 2026, this seed extension round reflects industry interest in building capital-efficient infrastructure that goes beyond the constraints of one-to-one immediate settlement.

The funding round was led by Blockchange Ventures, with participation from Coinbase Ventures and others. This brings Cycles' total cumulative funding to $8.7 million as of May 21, 2026.

Cycles is developing a decentralized multi-party settlement protocol to fundamentally overhaul how debt and liquidity are managed. Investors expect this protocol to reduce the complexity of existing financial systems and increase capital utilization across the blockchain ecosystem.

Cycles is an open settlement protocol designed to clear the most debt for the most people with the least amount of money.

Ethan Buchman is well-known as a pioneer of Cosmos, which advocates for the 'Internet of Blockchains.' Cycles is seen as an attempt to address liquidity fragmentation and settlement bottlenecks that still exist within connected networks, drawing on his experience with interoperability at Cosmos.

Limitations of Immediate Settlement and Capital Efficiency Issues

The cryptocurrency industry has long preferred immediate settlement, but Buchman points out that this actually hinders capital efficiency. Requiring immediate liquidity for every transaction limits market depth and results in capital being unnecessarily tied up.

• Balance sheet compression through multilateral clearing
• Decentralized mechanism based on double-entry bookkeeping
• Settlement efficiency through atomic cycle execution
• Security maintained without a central counterparty

The Cycle protocol introduces the concept of 'balance sheet compression,' which uses graph algorithms to offset obligations between multiple parties. Unlike traditional novation-based clearing where a central counterparty (CCP) assumes the risk, this approach resolves debts without redistributing risk.

For technical security, Cycle integrates privacy-preserving technologies such as Trusted Execution Environments (TEE) and Zero-Knowledge Proofs (ZKP). These tools ensure the confidentiality of transaction data while maintaining censorship resistance during the multilateral batching process.

Historical Precedents and Modern Applications

Buchman cited the practice of merchants offsetting obligations without moving cash at historical European trade fairs, as well as 20th-century experiments in Yugoslavia and Slovenia. Cycle is the result of evolving these historical netting techniques into modern decentralized technology.

This protocol is highly likely to create new economic design patterns by introducing more sophisticated credit and settlement systems to the cryptocurrency market. Ultimately, Cycle's strategic goal is to facilitate maximum economic flow with minimal capital.