Institutional interest in decentralized finance (DeFi) could soon grow thanks to Compound’s integration of crypto custodian Curv, which according to CoinDesk is primarily focused on institutional clients.
Curv reportedly services well-known brokers like Swissborg and eToro, and could help the decentralized finance space grow after being integrated into the number one DeFi protocol Compound.
DeFi is a nascent space that to some investors may be deemed high-risk. Several DeFi protocols have already been exploited by hackers, and in a world where near-zero interest rates are now the norm the APR being offered on DeFi protocols could seem too good to be true.
Compound, for example, offers a yield of over 2% a year on stablecoins, with additional income coming from the distribution of its COMP governance token to those who lend or borrow funds with it. Despite the perceived risks, it’s the number one DeFi protocol, with over $695 million worth of crypto locked in it.
Speaking to CoinDesk, Curv Chief Operating Officer Josh Schwartz revealed that the integration of the crypto custodian into the protocol came in response to demand, as it got “requests for it maybe about two, two-and-a-half months ago.” He added:
[Compound] has a long list of institutions who would love to interact with them but need a secure stack to do so.
To integrate with Compound, Curv even had to build a separate “policy engine” that matched its Ethereum-based smart contracts. The demand from institutional investors seems to have been worth the effort.
The Growth of DeFi
The decentralized finance space was born back in October 2017, but at the time most did not know about it – even in the cryptocurrency space. It slowly started growing with the rise of decentralized exchanges and lending protocols, but the total value locked in it only grew past the $500,000 mark back in October 2019, a full two years later.
Its first major application was Maker and its decentralized stablecoin DAI. With the growing popularity of the lending and borrowing protocols and with the birth of yield farming thanks to COMP and other similar governance tokens on these platforms, the value locked in DeFi quickly started growing, so much so there are now over $2.5 billion locked in it, according to DeFi Pulse.
The space is still growing, however, as cryptoasset exchanges are now listing DeFi-related tokens, making them easily accessible to investors who have not yet explored the world of decentralized exchanges.
Popular bitcoin exchange OKEx, for example, has earlier announced the listing of Polkadot (DOT), a project from the Web3 Foundation that will make it easy to build and connect decentralized applications, services, and instructions. OKEx’s announcement quotes the firm’s CEO Jay Hao as saying:
The Polkadot platform has been built by some of the brightest minds in the crypto space, and its mission of enabling Web3 where our data is our own and is safe from any centralized authorities is truly admirable. We’re very happy to be at the forefront of the next web and offer yet another in-demand project to our users.
Polkadot was built by a foundation founded by Ethereum co-founder Gavin Wood, among others, and has been a highly anticipated project as it could fix many of the problems we have on the web today. Behind its technology were major firms, including Google, Apple, Mozilla, and Microsoft.
Featured image via Pixabay.