Giancarlo and Draper Dragon Back Spout’s Bid to Make Borrowing Against Stocks Interest-Free
Former Commodity Futures Trading Commission Chairman Chris Giancarlo and venture firm Draper Dragon have publicly thrown their weight behind Spout, a Solana-based protocol that lets holders of tokenized US stocks borrow stablecoins without paying interest. Their endorsements follow Spout’s announcement of a $2 million strategic round on October 13.
In a post on X, Giancarlo, an angel investor in the company and a strategic advisor, said he was backing Spout’s effort to build a tokenized credit market. Draper Dragon published a full investment thesis on October 15, describing borrowing against stocks as a perk that has mostly been reserved for private banking clients.
Draper Dragon, Anchorage and Flow Traders among backers of $2M round
Spout co-founder and CEO Marc Ryan announced the round with a list of institutional backers: Draper Dragon, Anchorage Digital, Flow Traders, Taisu Ventures, Vessel Capital, Solayer, 2Square Capital and Bering Waters Ventures, with strategic backing from Solana Labs.
Angel investors include Giancarlo, Solana co-founders Anatoly Yakovenko and Raj Gokal, Superstate co-founder Dean Swennumson and Injective co-founder Eric Chen. Ryan also thanked Nick Ducoff, head of institutional growth at the Solana Foundation, Emon Motamedi, who runs the Solana Incubator at Solana Labs, and Draper Dragon partner Samiz Bayan for “believing in us early.”
“The idea is simple to say and was hard to build,” Ryan wrote. “Borrowing against your own portfolio does not have to cost you interest. We are bringing prime broker economics to the masses.”
Giancarlo frames Spout as a tokenized credit market
Giancarlo, who chaired the CFTC from 2017 to 2019 and has long argued for moving financial instruments onchain, pointed to traditional finance for his comparison:
“Excited to back @SpoutFi in building a tokenized credit market where capital stays put and compounds, as it does with mortgages and bonds in traditional finance.”
The point is that, in mature credit markets, owners can raise cash against an asset without selling it, so the asset keeps working for them. Spout is trying to bring that model to tokenized equities: a borrower keeps their shares, and their exposure to them, while drawing liquidity in stablecoins.
Covered call premium, not borrower interest, funds the loans
According to Draper Dragon’s description, users post tokenized assets as collateral and borrow USDC against up to 50% of their value, with no interest for as long as the loan is open. Every week, the protocol writes covered calls on the pooled collateral, with strike prices set well above the market, and the premium from those options pays the lenders who supply the USDC.
“The income comes from the shares themselves and the borrower doesn’t pay,” the firm said in its post on X. In its longer thesis, Draper Dragon said what drew it to the model was a source of lender returns that is easy to understand: option premium rather than token emissions.
The trade-off for borrowers is upside. Because calls are written against their shares, any gain above the strike price goes to the option buyer rather than the holder.
The pitch lands against a backdrop of expensive retail credit. Charles Schwab and Fidelity both currently charge 12.075% annually to customers borrowing less than $25,000 on margin, according to their published rate tables.
“Tokenizing a stock is only the first step. The next phase is making those assets productive,” said Bayan.
Draper Dragon said the investment builds on its existing tokenization portfolio, which includes Centrifuge and OpenTrade, and that it sees Spout as a credit layer: infrastructure that token issuers, trading venues and wallets could use instead of developing their own lending products.
Private beta next, mainnet still ahead
Spout is not live on mainnet yet. A beta version is available on Solana’s devnet test network, and Ryan said a private beta is “close,” adding: “There is a lot still to build.” Draper Dragon also said the private beta is coming soon.
The next milestones are opening that beta and then moving to mainnet. Whether the model scales will depend on execution, on how options markets behave, and on demand for tokenized equities onchain, which remains a young market.
Was this writing helpful?
Story Ends Here
Trust with CoinPedia:
CoinPedia has been delivering accurate and timely cryptocurrency and blockchain updates since 2017. All content is created by our expert panel of analysts and journalists, following strict Editorial Guidelines based on E-E-A-T (Experience, Expertise, Authoritativeness, Trustworthiness). Every article is fact-checked against reputable sources to ensure accuracy, transparency, and reliability. Our review policy guarantees unbiased evaluations when recommending exchanges, platforms, or tools. We strive to provide timely updates about everything crypto & blockchain, right from startups to industry majors.
Investment Disclaimer:
All opinions and insights shared represent the author’s own views on current market conditions. Please do your own research before making investment decisions. Neither the writer nor the publication assumes responsibility for your financial choices.
Sponsored and Advertisements:
Sponsored content and affiliate links may appear on our site. Advertisements are marked clearly, and our editorial content remains entirely independent from our ad partners.
Read the Next News
