The biggest problem with DeFi is not what you think

by · September 16, 2022

Cryptocurrency has converted another Wall Street veteran after ex-Morgan Stanley CEO Kevin Lepsoe launched a new decentralized finance (DeFi) platform. His new firm, Infinity Exchange, received a nice infusion of seed funding in an effort to boost DeFi adoption among institutions. In his pledge to help build “DeFi 2.0,” Lepsoe described one of the biggest pain points of DeFi 1.0 — and it’s one you probably haven’t heard of. As it turns out, if you want institutions to adopt your products and services, you need to provide them with a product suite they are familiar with. Until then, DeFi offers a value proposition that is obscured by risk and inefficiency.

This week’s Crypto Biz newsletter explores Lepsoe’s solution to the dangers of DeFi. We also dissect the latest news involving MicroStrategy and Fireblocks.

Fixed interest rates to create a DeFi 2.0 for institutions, says former bank manager

Lepsoe’s Infinity Exchange raised $4.2 million to continue building its institutional rate protocol, which introduces the concept of zero-bid floating rate. In other words, Infinity Exchange is trying to bring the interest rate mechanics and risk management practices of traditional finance to DeFi. According to Lepsoe, giving institutional investors access to a full pricing product suite, including fixed to floating pricing, could be the key to increasing DeFi adoption. While most of us know about DeFi’s boom-and-bust cycles, Lepsoe said the sector’s biggest challenge is the disconnect between floating and fixed-rate markets. Not exactly intuitive, but it’s a compelling take, nonetheless.

MicroStrategy to Reinvest $500 Million Stock Sale in Bitcoin: SEC Filing

Michael Saylor’s business intelligence firm MicroStrategy plans to buy a lot more Bitcoin (BTC), which at this point shouldn’t surprise anyone. In a recent filing with the United States Securities and Exchange Commission, MicroStrategy revealed that it has partnered with agents Cowen and Company and BTIG to raise $500 million via a stock sale, with proceeds going to raise more BTC. The business intelligence firm is doubling down on its Bitcoin gambit despite being down over $1 billion in its current position. With BTC hovering around $20,000 and with analysts expecting more downside in the near term, will MicroStrategy actually buy the dip this time, or will the price just continue to fall after the purchase?

Institutional Investors Heading Towards a Crypto Tipping Point: Apollo Capital

Remember when investing in crypto was considered a “career risk?” Now it doesn’t seem like it investment in digital assets carries the greatest reputational risk of all. What a difference a year can make. According to Apollo Capital’s Chief Information Officer Henrik Andersson, institutional investors may soon “flatten” their conservative approach to digital assets. In an exclusive interview with Cointelegraph, the crypto fund manager said institutional interest in digital assets is slowly picking up. Some of the large institutions, such as pension funds, may be waiting for others to make the first move because no one wants to be the first to be wrong. But when the floodgates open, not being awarded will be considered a bigger career risk.

Fireblocks records $100M+ revenue in subscriptions amid bear market

The crypto industry has crowned dozens of unicorns in the past two years, but how many of these companies have a viable business model? Blockchain infrastructure provider Fireblocks revealed that it generated over $100 million in annual recurring revenue this year, which is a major milestone given the current state of the market. Web3 start-ups, payment service providers, consumer brands and gaming companies all contributed to Fireblock’s massive catch, demonstrating that the blockchain industry is attracting steady interest despite the bear market.

Don’t miss it! Will Ethereum’s Merge Change Crypto History?

Ethereum’s merger has been described as a historic event for the blockchain industry as the largest smart contract platform embarks on a major shift in its governance structure. While most traders are fixated on Ether’s (ETH) price, there is much more at stake. Will the merger change the trajectory of the crypto industry, which is so dependent on Ethereum? Or will it prove to have a negligible effect in the long run? In this week’s market report, analysts Marcel Pechman, Benton Yaun and Joe Hall discussed this very topic. You can watch the full replay below.

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