City Protocol raises $11M to expand on‑chain structured product infrastructure

City Protocol announced a $11 million seed and Pre‑A financing round backed by investors including Dragonfly, Jump Crypto, CMT Digital, Stratified Capital, Adaverse and Mirana. The funding will support the rollout of its three‑layer infrastructure for tokenizing, vaulting and operating blockchain‑based investment products.

Three‑layer product model

The platform separates functionality into:

• Tokenization layer – converts an investment strategy or asset class into a tradable on‑chain product.
• Vault layer – handles deposits, withdrawals, execution limits, accounting and redemptions via standardized smart contracts.
• Issuance and operations layer – manages lifecycle tasks such as issuance records, NAV calculations, rebalancing, reporting, subscriptions and redemptions.

By reusing these components, asset managers can launch new products without building a bespoke technical stack for each strategy.

Venzo vaults go live

Venzo, the flagship user‑facing platform, currently hosts four strategy vaults:

1. Quantitative hedging
2. Cross‑exchange arbitrage
3. Private credit
4. On‑chain yield

According to the financing announcement, Venzo’s total value locked (TVL) is reported at roughly $30 million, with an earlier figure of $40 million cited in a prior version of the release.

Future thematic portfolios

City Protocol plans to add rule‑based thematic portfolios that operate directly inside users’ wallets. Unlike managed vaults, these portfolios will keep assets in the user’s wallet while automated programs execute purchases and rebalance according to publicly disclosed rules. Two categories are envisioned:

• Person‑tracking portfolios that mirror holdings disclosed by prominent investors or institutions.
• Sector‑themed portfolios focused on industries such as space exploration, metals and electric vehicles.

Regulatory backdrop

U.S. SEC Commissioner Hester Peirce has warned that certain on‑chain vault structures could be treated as securities, depending on factors like managerial control and the nature of the underlying assets. The SEC indicated it will assess each product on a case‑by‑case basis.