What is carrotfunding.io? In short, we are the first DeFi native trader funding firm, built to eliminate the trust, transparency, and counterparty risks that plague traditional proprietary trading firms. We combine the familiar structure of a performance-based evaluation process with the transparency of on-chain infrastructure and perpetual futures liquidity from decentralized protocols.
Unlike traditional trader funding firms, our business model is powered by smart contracts, making it inherently transparent and fundamentally different, solving many of the pain points and unanswered questions traders face with traditional structures.
Retail-focused prop trading firms have surged in popularity in recent years. The idea is simple: a trader pays an evaluation fee to access a simulated trading environment and tools to demonstrate their trading abilities and prove their consistency by following a set of trading objectives, and if they pass, they're rewarded with a funded account (also virtual funds) where they're eligible to monetize their trading profits. It's a win-win on paper, traders get access to capital with limited downside, while firms profit from the fees from those who don't make it, and in very rare cases, have profit-sharing as a secondary revenue stream.
If you've ever tried these challenges or were interested enough to do some homework, you'll know the reality often falls short of the ideal and that traditional prop firms operate with several significant limitations:
I. Opaque Processes
The prop trading aspect doesn't take place in the majority of firms. Even if proprietary aspects of the business may or may not exist, it’s impossible to verify publicly.
The technology used by most trader funding firms is built on systems originally designed for retail brokers. These systems are designed to allow customization of key trading costs, such as spreads, commissions, and swap fees, and firms can adjust these parameters at will. This flexibility creates opacity, because firms operate within closed software environments, traders have no independent way to easily verify whether the price feeds or trading conditions have been manipulated. This lack of transparency ultimately forces traders to rely on trust with no real ability to validate the fairness of the execution environment.
Even after a trader reaches funded status, there is no way to verify whether any trades are actually being sent to the market. Since these firms operate in a closed environment, traders are forced to simply trust them, with no independent means of verifying how risk is managed behind the scenes. This dynamic amplifies conflicts of interest, particularly in firms that have no connection to a liquidity provider and thus no real way to hedge or manage their exposure when they stumble across a needle in the sand, a profitable trader.
II. Counterparty risk
Every valuation entails real risk, and upon reaching the funded phase, a trader’s position becomes a contract with the funding firm as the counterparty, carrying associated liability.
Over the years, we've seen many instances of firms failing, unable to meet their obligations, leading to delayed or partial payouts, or worse, shutting down overnight while citing cash flow issues. This poses a serious problem for traders who aren't just trying to game the system but are actually looking for a reliable counterparty that can support them in scaling their trading, the actual goal of a fully-fledged proprietary trading firm. These counterparty failures don't just hurt individual traders but also damage the credibility of the industry as a whole.
The trader funding space is also a fairly new industry with no independent oversight. And even if regulation eventually increases the barriers to entry and requires adequate capital, you are still left with trust assumptions.
Obviously, there are many other variables that impact the size of the risk a firm is carrying, largely tied to the operators and practices that affect the long-term viability of the business model. But this is something we can discuss in a separate post.
Keep in mind that not all firms are equal, some are not just focused on flashy marketing but have real liquidity relationships and actual risk desks. Unfortunately, however, this information is not publicly available.
As you can see, it’s trust assumption after trust assumption after, you guessed it, another trust assumption, highlighting the systemic vulnerability of the current system and creating a toxic dynamic for both operators and individual traders.
Now that we've covered the general idea, let's highlight what sets carrot apart. Our platform brings several unique benefits that traders won't find in the legacy trader funding firm model:
I. On-chain Business Model
carrotfunding.io's business model is designed to bridge decentralized finance infrastructure with trader performance. It is structured to ensure long-term sustainability, full capital transparency, and alignment of incentives across all stakeholders.
Upon the sale of each evaluation plan, revenue is allocated as follows:
Once a trader completes the evaluation and transitions into a Carrot Funded Trader Account, and if their performance shows strong potential for continued profitability, their trading activity can be connected to the on-chain vault. From that point, profits generated are distributed as follows:
carrotfunding.io acts as the fund manager of the vault and receives fees under a standard asset management structure, 1% management fee and 20% performance fee, both subject to a high-water mark to ensure investor protection and performance alignment.
This model creates a transparent, fully auditable capital ecosystem. All flows, evaluation fees, fund allocations, and trader payouts are executed and visible on-chain, eliminating traditional counterparty risk and the opacity common to legacy proprietary trading firms.
II. DeFi-powered Simulated Trading Environment
Our proprietary trading terminal reflects real DeFi market conditions. Pricing and execution logic are sourced directly from decentralized trading protocols. This means the trading conditions you’re evaluated under are the same as those faced by real traders on-chain.
We apply no markups on any fees or spreads. All trading conditions reflect the live environment of the decentralized trading protocol.
III. Extensive Crypto Market Access
As a DeFi-native trader funding firm, our focus is on providing access to as many crypto trading pairs as possible. Through our integrated trading venues, we offer access to over 230 crypto trading pairs, including majors, altcoins, and even the latest meme coins.
Beyond these points, we strive to be user-friendly. Our goal is to make the experience seamless. You shouldn't have to struggle with multiple accounts for the dashboard and trading terminal. One platform, one login.
You can learn more about us in our documents.
Join Us on the Journey
We're just getting started at carrotfunding.io, and we'd love for you to be a part of this journey.
Ready to give it a try? Check out our Closed Alpha program to be among the first users on the platform.
You can also hop into our community by joining our Discord server, where you can ask questions, share insights and feedback, or just hang out with fellow traders.
Let's build something new together.
