Variational
Variational (the Variational Protocol) is an on-chain derivatives protocol deployed on Arbitrum One that provides peer-to-peer trading, clearing, and settlement of perpetual futures, options, and other derivatives through smart contracts.[1][2] The protocol lets users trade crypto and traditional assets — cryptocurrencies, equities, commodities, indices, and foreign exchange — from a single cross-margined account, aggregating liquidity from centralized exchanges, decentralized exchanges, and traditional-finance dealers to price each market.[3][4]
Overview
Variational replaces the on-chain order book used by most decentralized derivatives venues with a request-for-quote (RFQ) mechanism. Under this model, a taker requests a price for a specific instrument, makers respond with bids or offers, and the taker fills against the best quote, obtaining what the company calls "the best all-in price for every trade without touching an order book."[1][6] Because each trade is negotiated bilaterally, counterparties can customize terms such as expiries, margin requirements, and liquidation rules directly between themselves, and the model extends to options and structured products in addition to perpetuals and swaps.[4][6] Co-founder Lucas Schuermann summarized the design choice by stating, "Everyone was trying the same idea. They were trying to build an exchange. An order book on-chain. It's a great idea... but we asked the question: why is nobody trying to build a broker-like model?"[5]
Liquidity for each market is sourced through an aggregation layer that draws on centralized exchanges, decentralized exchanges, and TradFi dealers, which Variational says produces deeper markets than any single venue.[6] In a related statement attributed to the account , the company framed its approach as "We're not rebuilding the order books, we're just going straight to where they're most liquid."[7] The trading experience is intended to resemble a centralized perpetuals exchange — tight spreads, deep liquidity, and fast fills — while custody and clearing remain on-chain.[1]
Settlement is handled through isolated bilateral pools implemented as on-chain escrow smart contracts on Arbitrum One. Each user holds their own settlement pool with the protocol's liquidity provider, so that a liquidation or default in one pool does not affect any other user's margin — a property the company describes as "Isolated Risk," stating that "A liquidation between two counterparties never touches anyone else's margin."[1][6] The protocol operates a Protocol Treasury on Arbitrum at the address beginning 0x5e91b and ending 8d645.[1] Before launching on private mainnet, the protocol completed two security audits: one by Zellic in December 2024 and one by Spearbit in March 2025.[1]
History
Variational built out Omni through 2024 and 2025, with the testnet, an automated market-listing engine, the isolated settlement pools, the Zellic audit, and production load testing completed as 2024 milestones, followed by the private mainnet launch of Omni in the first quarter of 2025.[1] Later product work through 2025 included a leaderboard, profit-and-loss cards, a full referral program, configurable leverage, a rework of the Omni user interface, trigger orders, chart-based order management, and the launch of the Omni Points program on 17 December 2025.[1]
Through 2026 the protocol shifted much of its focus to real-world assets and traditional-finance liquidity. On 21 August 2026, the company reported that after 90 days of listing TradFi markets it supported more than $500 million in TradFi open interest and had processed more than $14 billion in TradFi volume.[5] It stated that over the course of the year "traditional markets went from none, to a small portion, to the majority of Variational's daily volume."[7] On 25 August 2026, coverage reported the platform reaching a 24-hour trading volume above $2.1 billion.[5]
In September 2026, Variational launched Swaps, described as its product for trading real-world assets on-chain; the company said the first swap markets were live and that execution costs were up to eight times lower than the most liquid TradFi perpetuals available on-chain, and that swap funding "remains flat and predictable, even when funding rates on perps spike due to volatility."[5][7] The company also announced its next major project, the Omni trading API, which would allow programmatic trading across what it described as more than 550 listed TradFi and crypto markets, extending access beyond the front end.[7] A public statistics page powered by Entropy Advisors, tracking metrics including volume, open interest, daily active accounts, treasury inflows, and spreads over time, went live on 25 August 2026.[5] By this period the company reported more than $800 million in open positions across its live markets.[1]
The protocol has drawn media coverage tied to its funding and its role in the Arbitrum ecosystem, including reporting by TechInAsia and DealStreetAsia on the 2024 seed round, Cointelegraph's 2024 Web3 funding roundup, and FinSMEs on the 2025 strategic round.[5] Co-founder Edward Yu appeared as a guest on Corey Hoffstein's Flirting with Models podcast in August 2025 to discuss what inspired the creation of Variational.[5]
Applications
Variational follows a "One Protocol, Many Apps" strategy in which multiple front-end products share the same underlying protocol for trading, clearing, and settlement. The two primary applications are Omni, a consumer-facing perpetuals venue, and Pro, an institution-focused settlement layer.[6][3]
Omni
Omni is the first application built on the Variational Protocol and functions as a zero-fee perpetuals and swaps trading venue. It allows users to trade perpetuals across both crypto and traditional markets within a single cross-margined account and offers up to 50x leverage with no trading fees regardless of position size — the company gives the example that "Whether you're opening a $100 or $1,000,000 position, your fees on Variational Omni are always the same: 0%."[3][6] According to Variational's documentation, more than 450 crypto and real-world-asset markets are live on Omni, with over 100 additional real-world-asset markets planned.[3]
Omni's zero-fee model is enabled by the Omni Liquidity Provider (OLP), a single professional liquidity provider that runs each taker request against external liquidity from centralized exchanges, decentralized exchanges, and TradFi dealers and returns one all-in price. Rather than charging trading fees, Omni vertically integrates this liquidity provider and earns revenue from the market-making spread — the yield that would otherwise be captured by external market makers.[1][3] The company has described this as building "a broker-like model" rather than an exchange, and states that the spread, not fees, is its source of revenue.[1]
Pro
Pro is an institution-focused settlement layer for customized over-the-counter (OTC) derivatives built on the same protocol. Its stated purpose is to remove the inefficiencies of institutional OTC trading, which the documentation describes as commonly negotiated through informal channels such as Telegram chats and manually settled retroactively, exposing participants to counterparty risk.[3] Pro is designed to automate the entire institutional trade flow "from booking and clearing to settlement" on-chain, and lets institutions create customized derivatives, set specific margin and liquidation rules, escrow collateral in segregated on-chain contracts, and use the Variational Oracle for pricing.[3] The documentation contrasts Pro with existing venues such as Paradigm and Deribit, which it says lack customization and support options only on major assets such as Bitcoin, Ether, and Solana, yet still process upward of $1 trillion in annual volume; Pro's stated goal is to unlock "billions of dollars in volume through better price discovery and accessibility."[3]
VAR Token
The protocol's native token, VAR, is planned as an ERC-20 token on Arbitrum One. As of mid-2026 it had not yet launched and was not listed on any centralized or decentralized exchange, appearing only in an "Upcoming" pre-market queue on Whales Market pending its listing going live.[1] On 24 September 2026, the company announced that the VAR token generation event (TGE) had been scheduled for the fourth quarter of 2026, alongside a genesis airdrop of 32% of total supply, with weekly points distributions continuing until TGE.[7][2]
Three token parameters have been confirmed publicly. Approximately 50% of total supply is allocated to the community, distributed over time through community initiatives beginning with the Omni Points program; at least 30% of protocol revenue is committed to buying back and burning VAR; and the token will reside on Arbitrum One.[1] Because Omni charges no trading fees, "protocol revenue" for the buy-back-and-burn commitment refers to the spread captured by the OLP and the share of OLP profits routed to the protocol treasury.[1] A full allocation breakdown across team, investors, treasury, and ecosystem buckets, along with total fixed supply and vesting and cliff schedules, had not been published as of the latest available information.[1]
The Omni Points program is the primary distribution mechanism ahead of the airdrop. It launched on 17 December 2025 with 3,000,000 points retroactively distributed to existing traders based on activity through 11 December 2025.[1] Points are issued every Friday at 0:00 UTC for the previous week's platform activity, with weekly distributions scheduled to run through the end of the third quarter of 2026.[1] The program includes a permanent 10% earnings boost for accounts that traded before the program launched, a tier system of activity-based boosts ranging from 0% (Iron) up to +5% (Infinity), and a referral mechanism in which referrers earn one point for every ten points their referrals accumulate.[1] No fixed conversion rate from points to VAR has been specified, and the team reserved the right to modify the program in response to inorganic behavior or terms-of-use violations.[1]
Funding
Variational has raised approximately $61.8 million in disclosed institutional funding across multiple rounds.[1][5] Its seed round of $10.3 million was led by Bain Capital Crypto with participation from Peak XV Partners (formerly Sequoia India), Coinbase Ventures, Dragonfly, Hack VC, and other strategic angels; the seed was originally closed in 2021 and announced publicly in October 2024.[1][5] In June 2025, the company raised an additional $1.5 million in a strategic round from Mirana Ventures, Caladan, Zoku Ventures, and other partners, an event it paired with the launch of a referral program.[5][1]
The largest round to date was a $50 million Series A announced on 20 May 2026, led by Dragonfly Capital with Bain Capital Crypto and Coinbase Ventures joining as repeat investors.[1][5] The company said the Series A would fund its expansion into real-world-asset perpetuals and the build-out of Pro for institutional OTC clients, stating it had "raised $50M led by Dragonfly to go all in on real-world assets and bring TradFi liquidity on-chain."[5] Alongside the announcement, Variational launched 24/7 gold, silver, copper, and oil perpetuals to test its infrastructure ahead of listing more than 100 additional TradFi markets.[5] Across its rounds, the protocol's cap table includes Dragonfly, Bain Capital Crypto, Coinbase Ventures, Peak XV Partners, Sequoia Capital, Hack VC, North Island Ventures, Mirana Ventures, and Caladan.[4]
Team and Company
Variational was co-founded by Lucas Schuermann and Edward Yu, who previously worked together at Genesis Trading and co-founded Qu Capital in 2017.[1] Schuermann serves as Co-Founder and Chief Executive Officer and was previously VP of Engineering at Genesis Trading, while Yu serves as Co-Founder and was previously VP of Quant Trading at Genesis Trading.[1] The broader leadership team includes Justin Bram as Head of Product, Maxwell Bibeau as Head of Growth, and SeungJae Lee as Head of Business Development for the Asia-Pacific region.[5]
The company is operated as Applied Variational Research SEZC, a privately held software development firm with roughly 20 to 25 staff distributed across multiple countries, including the United States, Japan, Canada, China, Hungary, India, and Vietnam.[5][1] Sources place its founding between 2021 and 2022, consistent with its seed round having closed in 2021 while the operating company is recorded as established in 2022.[4][5] The company states its engineering and quantitative benches draw on experience from Google, Meta, Virtu, IMC, and Jane Street.[1][6]
