Kairos Labs, Inc. has announced a $2.4 million seed funding round and published a technical whitepaper for its permissionless, non-custodial interest rate swap protocol built for the Ethereum Virtual Machine. The funding round was led by 6th Man Ventures, with participation from Lattice, Advancit Capital, and Compa Capital. This follows a successful beta phase that generated over $300 million in notional swap volume.
The company, an Alliance-backed firm (ALL15), aims to bridge a critical gap in decentralized finance (DeFi). While DeFi has surpassed $40 billion in outstanding loan balances, it lacks the infrastructure for interest rate swaps, which are foundational in traditional finance with a notional market exceeding $500 trillion. These swaps enable lenders to hedge floating-rate exposure and offer fixed rates, a capability essential for long-duration lending, real estate financing, business loans, and structured credit.
"Nearly all DeFi lending still runs on variable rates," said Thomas Harrison, Co-Founder and CEO of Kairos Labs. "That works for short-term leverage, but it breaks down for real estate, business financing, or structured credit. Kairos is the hedging layer that makes fixed rates possible onchain."
The protocol's mechanism allows anyone to create an interest rate swap market by specifying immutable parameters: the underlying rate, swap tenor, collateral token, risk controls, and pricing oracles. Markets are created in pairs—one selling fixed-rate swaps and the other selling floating-rate swaps—allowing liquidity providers to allocate capital based on their directional view and risk tolerance. Liquidity can be supplied directly or through vaults managed by curators, with initial vault adapters integrating with Morpho Vault V2 and the ERC-4626 standard.
Serge Kassardjian, Managing Partner at 6th Man Ventures, highlighted the breakthrough: "DeFi has been stuck in a chicken-and-egg dynamic for years... Morpho and others are moving to support fixed-rate lending at scale, and Kairos is the hedging infrastructure that makes it work. We've been waiting for this moment."
Beyond hedging, the protocol is seen as a key enabler for fixed-income products in DeFi, such as bonds and structured credit. "Kairos is solving one of the most important unsolved problems in DeFi," said Imran Kahn, Co-Founder of Alliance. "Without interest rate swaps, there is no real credit market. This is the layer that unlocks everything else."
The full Kairos protocol is expected to launch on the Ethereum mainnet and Base in the coming weeks, with additional chain deployments to follow.
