eToro Backs $12.5M Extended Funding to Embed Onchain Derivatives
eToro’s $12.5 million investment in onchain derivatives platform Extended signals a major institutional bet that decentralized finance infrastructure will become the backbone of mainstream trading. The digital broker is now integrating perpetual futures directly into its Zengo wallet following a $70 million acquisition of the self-custodial platform in April 2026, marking a structural shift away from centralized exchange dominance toward blockchain-native trading.
The Extended Funding Round and Strategic Expansion
Extended, founded by former Revolut executives, just closed a $12.5 million funding round led by eToro with participation from Jump Crypto. The onchain perpetual futures exchange has already processed over $245 billion in trading volume by June 2026 and operates with up to 100x leverage across more than 100 markets. The platform runs on StarkWare’s StarkEx scaling infrastructure, a validity-rollup system that settles transactions on Ethereum while maintaining high throughput and low costs.
eToro’s decision to lead this round represents more than a typical venture investment. The broker plans to embed Extended’s perpetual futures engine directly into the Zengo wallet interface, giving users access to decentralized derivatives while maintaining self-custody of their assets. Over time, eToro intends to bring broader DeFi products into its core platform, a significant departure from its historical focus on centralized trading infrastructure.
Elad Lavi, eToro’s executive vice president of corporate development and strategy, explained the strategic thinking: “We are seeing growing demand from our users for seamless access to DeFi products. Our recent acquisition of Zengo and our investment in Extended are key parts of our strategy to meet this demand and expand our Web3 ecosystem.”
Extended founder Fakhrutdinov added in a statement: “The first phase was building for DeFi natives. The next is expanding the infrastructure and partnerships needed to support the next stage of onchain derivatives.”
Market Structure Shifting Toward Decentralized Venues
The eToro-Extended partnership arrives amid intensifying competition among major brokerages to become what industry observers describe as an “everything exchange” or “everything app.” Robinhood has expanded its blockchain ambitions with tokenized stocks and perpetual futures, while also planning to extend perpetual futures into commodities like gold and oil. Coinbase has expanded into perpetual futures trading, and prediction market operator Kalshi recently entered the perpetual futures space.
This convergence reflects deeper market trends. According to CoinGecko’s 2026 Crypto Perpetuals Report, decentralized exchange open interest share in perpetual futures rose from 3.6 percent in early 2025 to 13.5 percent in 2026. Despite this rapid growth, centralized exchanges Binance and OKX still lead overall perpetual trading volume. The shift suggests that as trading infrastructure moves onchain, the traditional distinctions between brokerages, crypto exchanges, and prediction market operators are becoming obsolete.
The integration of derivatives into Zengo specifically targets institutional and sophisticated retail users who prioritize custody control while demanding professional-grade trading tools. This hybrid model avoids the regulatory and operational friction of centralized exchanges while delivering the liquidity and low-latency execution that perpetual futures require.
Implications for eToro’s Profitability and Market Position
eToro reported $13 million in profit from crypto trading in Q1 2026, accounting for approximately 5 percent of the broker’s total net trading profit of $258 million across all asset classes. This represents a substantial decline from $46 million in crypto profit during the same quarter in 2025, a sharp drop that underscores why the broker is moving aggressively into DeFi infrastructure and higher-leverage products.
By embedding perpetual futures into its wallet and platform, eToro gains exposure to substantially higher trading fees and order flow opportunities typical of derivatives markets. Perpetual futures generate significantly more fee revenue per transaction than spot trading, particularly at leverage levels Extended offers.
The broker’s strategy also hedges against continued regulatory pressure on traditional crypto spot trading, particularly in jurisdictions with stricter leverage restrictions. Onchain derivatives operated through decentralized protocols present a different regulatory surface than centralized exchanges, potentially offering eToro greater operational flexibility.
What This Means for the Market
The eToro-Extended deal exemplifies a broader institutional consensus that decentralized finance infrastructure will not remain marginal to mainstream finance. Instead, major brokerages and exchanges are now embedding onchain protocols into their core offerings, effectively merging institutional capital markets with blockchain infrastructure. This represents the early stages of what may become a fundamental reorganization of financial market structure.
The timing coincides with regulatory clarity expectations around cryptocurrency derivatives. The U.S. CLARITY Act, which would classify XRP as a commodity, remains pending Senate action, with floor voting now anticipated in late July or early August. Passage of such legislation would likely accelerate institutional adoption of onchain derivatives by removing regulatory ambiguity around asset classification.
For retail traders and institutional investors, the practical effect is increasingly seamless access to leveraged cryptocurrency derivatives with custody control, a product category that barely existed at scale two years ago. For exchanges and brokerages, this represents a race to capture derivatives volumes before regulatory frameworks fully crystallize.
As blockchain-based trading infrastructure matures and capture network effects, first-mover advantages will likely compound, making eToro’s early aggressive positioning in Extended potentially consequential for market share distribution across the next two years.
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