When we envision the people who are engage in Decentralized Finance—DeFi for short—GenZ and early millennials are generally the earliest adopters of this new way to conduct finance. However, less publicized are the giant institutions—such as investment banks, pension funds and family offices—who are increasingly looking to participate in DeFi’s rapidly-growing ecosystem. As one of the first-movers in this domain, Liquid Meta is looking and seeking to bring accessibility to this market.
Similar to rank & file consumers, institutions are also looking to do such thing as yield farming. This action allows users to stake crypto assets in various non-custodial, DeFi protocols to earn high fixed or variable interest rates. Right now, earning 5-6% returns in low-risk fashion is commonplace, and much higher than 1-percent interest rates being offered by major banks for deposit savings. The amount of additional capital large institutions can generate on their free-cash by yield farming is substantial.
Owing to a confluence of factors such as technological innovation, changing investor demographics and persistently low interest rates, DeFi has emerged faster than practically any industry ever known. As we can see from the chart below, the amount of cryptocurrency held in DeFi has literally gone from sub-1 billion dollars in April 2020 to over $100 billion today. While this is mostly fueled by retail accounts, sophisticated institutions are clamoring for a piece of the pie.
Amount of Cryptocurrency Held in DeFi Worldwide From August 2017 to October 15, 2021
However, before institutional participation can normalize, several major hurdles need to be cleared. Any incumbent platform must satisfy a host of regulatory and security protocols to allow institutions the ability to operate at scale. This would include necessities such as asset monitoring, performance analysis, reporting & accounting, pre-trade compliance and network security—issues that don’t necessarily bottleneck the average retail DeFi consumer.
As Liquid Meta explains, the company is not only a first-mover in targeting the institutional class of the spectrum, it also plans to become its first customer—a maneuver that will help prove-out its system in real time.
We’re the first company that’s building a platform, a product, that’s targeting, you know, the institutional end of the spectrum first. What I will say is very important to clarify, is that LiquidMeta, ourselves, will be the first customer/client of the product, of the strategy. We will be really able to perfect and hone-in on what it takes to be an efficient allocator of liquidity across decentralized finance, because that is the core business model.
Click on the embedded link to see our inaugural interview with Liquid Meta CEO Jon Wiesblatt, in his own words.