First Mover Asia: Why DeFi Targets Institutions It Wanted To Topple; Cryptocurrency Price Rally | Cryptocurrency

Institutional DeFi is growing at a rapid pace and some research firms claim that this niche sector will attract over $1 trillion in investment capital over the next five years; bitcoin bounced back above $19,000.

Hello. Here is what happens:

Price: Cryptos rallied on Wednesday night with bitcoin surging above $19,000 again and ether surging above $1.6,000

Insights: DeFi firms that once intended to dethrone big financial institutions are now targeting them.

Prices

  • Bitcoin (BTC): $19,310 +2.5%
  • Ether (ETH): $1,627 +5.8%
  • S&P 500 daily close: 3,979.87 +1.8%
  • Gold: $1,727 per troy ounce + 1.6%
  • Daily close of the 10-year Treasury yield: 3.26% −0.07

Bitcoin, Ether, and Gold prices are taken at around 4 p.m. PT. Bitcoin is the CoinDesk Bitcoin Price Index (XBX); Ether is the CoinDesk Ether Price Index (ETX); Gold is the COMEX spot price. Information about CoinDesk indices is available at coindesk.com/indices.

Crypto Rally Late Wednesday

By James Rubin

Cryptocurrencies found a late spark on Wednesday to regain ground lost in a plunge just over 24 hours earlier.

Bitcoin was recently trading at around $19,300, up more than 2% for the period after falling to $18,558 on Tuesday, its lowest level in two months. The biggest cryptocurrency is now struggling to hold support above $19,000 as investors pull back amid the same Federal Reserve monetary ferocity and macro uncertainty that has plagued riskier assets During months.

“There’s probably been a lot of time for bitcoin where macro factors probably didn’t matter, but to the extent that the goal is to be more mainstream, the more mainstream it becomes, the more it’s affected by common things,” Noah Hamman, CEO of investment management firm AdvisorShares, told CoinDesk TV’s First Mover program.

Ether continued its recent trend of outperforming bitcoin, rising nearly 6% to trade above $1,630 as cryptocurrency markets regained some of their enthusiasm for the blockchain-powered merger. Ethereum from proof-of-work to more energy-efficient proof-of-stake. On Tuesday, the second-largest crypto by value had dropped below $1,500 for the first time in more than a week.

Among other major altcoins, ALGO, the proof-of-stake token, carbon-negative blockchain network Algorand, recently rose more than 6% after the company announced a protocol upgrade. YGG and CRV jumped over 12% and 11%, respectively.

Stock markets

Stock markets closed higher amid at least temporary risk aversion, with the tech-focused Nasdaq and S&P 500 both up around 2% and the Dow Jones Industrial Average (DJIA) climbing a close margin. 1.5%. On Wednesday, markets received fresh signals that the Federal Reserve would approve a third consecutive 75 basis point interest rate hike, with several Fed officials reiterating in separate speeches the bank’s commitment to tackling the inflation. The Fed has raised interest rates at its fastest pace in about four decades.

“We’re here for as long as it takes to bring inflation down,” Fed Vice Chair Lael Brainard said in a speech to a banking conference in New York on Wednesday.

In his remarks, Brainard also said that the cryptocurrency market carries similar risks to traditional finance, but will need new regulations for situations not covered by existing laws. Given the unique characteristics of cryptocurrency, there is a need to “create clear regulatory safeguards,” she said.

Brainard also reaffirmed its position on the risk of stablecoins. “Stablecoins are one of those areas that I believe have the greatest potential for risk if not properly regulated and of course these risks can easily spill over into the mainstream financial system due to the executable nature of stablecoins,” she said.

The biggest winners

Asset Teleprinter Return DACS sector
Cosmos ATOM +8.4% Smart contract platform
Ethereum ETH +5.9% Smart contract platform
Chain link LINK +5.8% Computing

The biggest losers

There are no losers in CoinDesk 20 today.

Knowledge

Why DeFi Companies Are Targeting Institutional Investors

By Shaurya Malwa

SEOUL, South Korea — Decentralized finance (DeFi) firms are increasingly targeting a sector they once sought to usurp: traditional finance players and institutional investors.

The change is surprisingly consistent. Ethereum lending projects Aave and Compound began offering institutional versions of their products in 2021, while Maker introduced an SME lending platform called Monetalis under the Maker fold, with Maker as the sole backer – despite opposition from token holders.

Nor are the offers lowball efforts resulting from a bear market. A cohort of “institutional DeFi” is also growing at a significant rate, according to reports. Some research companies are even targeting the niche sector to attract over $1 trillion in investor capital over the next five years.

Such moves are a shift from the past philosophy of DeFi, which formed in the deep bear market of 2019 as an antidote to TradFi, or traditional finance. A then sparsely populated Telegram group – simply called “DeFi” – had protocol builders and aspiring users discussing and envisioning a world where smart contracts entirely rule the supply of funding to users, a world where TradFi had no scope.

The Telegram group counted among its many participants then-unknown developers and investors such as Kain Warwick of Synthetix, Artem K of Yearn, Arthur Cheong of DeFiance Capital and Robert Leshner of Compound, among several others, who have since become DeFi superstars. But today’s developments are an almost 180 degree change from that world without TradFi.

Go “where the growth is”

What changed? According to Maker developer Nik Kunkel, it’s about “where the growth is.”

“If you go to an institution, they will borrow $100 million. We have people who want to borrow a billion (dollars) from us,” Kunkel said at the August BuildAsia conference in Seoul. “Trying to get that critical mass of retail users that you need to get $500 million in loans in total is really tough, isn’t it? »

Kunkel added that the cost of acquiring users for a retail participant remains high, as opposed to marketing products to institutions that offer “better value for money” in terms of resource utilization by a retail participant. project.

The sentiment was backed by Doo Wan Nam, founder of governance-focused cryptocurrency fund StableNode. “Many DeFi ecosystems have been aware that the user base as well as liquidity can be significantly improved by working with TradFi,” Doo told CoinDesk.

The likes of Doo say DeFi isn’t too far off the mark either. “I would also add that a big part of the DeFi philosophy was also to educate and revolutionize the current financial system – which is still applicable,” he said in a Telegram message.

Still, Maker’s Kunkel says the recent spurt in mass catering does not indicate that the project is no longer about retail.

“There are different initiatives to serve different purposes. So I think on the growth side we look more to institutions, but when it comes to ‘banking the unbanked’, and that’s where the second layer comes in,” Kunkel said. .

“It is too expensive to deal with Ethereum on the first layer. You can’t tell someone in Africa or someone in Paraguay that they have to spend $20 on gas. It’s not feasible.

“This is where the push for layer two comes in,” Kunkel noted, adding that fees on these solutions were “under $1 right now” and that future simulations conducted by the team show that transaction costs “gradually become insignificant”.

Layer 2 refers to a collection of off-chain systems or separate blockchains built on top of Layer 1, or the core blockchains. This software aggregates multiple off-chain transactions into a single Layer 1 transaction, which helps reduce data overhead, enabling faster network transactions at lower cost.

Important events

Practicing Law Institute: The SEC Speaks in 2022

13:00 HKT/SGT (05:00 UTC): Japan Eco-Watcher Survey (August/Current/Outlook)

8:15 p.m. HKT/SGT (12:15 UTC): European Central Bank Monetary Policy Statement

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First Mover Asia: Why DeFi Targets Institutions It Wanted To Topple; Cryptocurrency Price Rally | Cryptocurrency


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