Crypto Biz: The biggest problem with DeFi isn’t what you think

Decentralized finance still has a way to go before it can attract institutional capital. Meanwhile, Fireblocks has become a 9-figure revenue-generating company.

Cryptocurrency has converted another veteran of Wall Street after ex-Morgan Stanley executive Kevin Lepsoe launched a new platform for decentralized finance (DeFi). His new firm, Infinity Exchange, received a nice injection of seed funding in a bid 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 give them a product suite they’re familiar with. Until then, DeFi offers a value proposition that’s obscured by risk and inefficiency. 

This week’s Crypto Biz newsletter explores Lepsoe’s solution to the perils 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 exec

Lepsoe’s Infinity Exchange raised $4.2 million to continue building its institutional fixed income protocol, which introduces the concept of a floating rate with a zero-bid offer. 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, providing institutional investors with access to a full rates product suite, including fixed-to-floating rates, could be the key to boosting DeFi adoption. Although most of us know about DeFi’s boom-and-bust cycles, Lepsoe said the sector’s biggest challenge is the disconnect between floating rate and fixed-rate markets. Not exactly intuitive, but it’s a compelling take, nonetheless.

MicroStrategy to reinvest $500M stock sales into Bitcoin: SEC filing

Michael Saylor’s business intelligence firm MicroStrategy plans to buy a lot more Bitcoin (BTC), which, at this point, should surprise nobody. 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 toward acquiring 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 teetering around $20,000 and with analysts expecting more downside in the short term, will MicroStrategy actually buy the dip this time, or will the price just keep on dipping after the purchase?

MicroStrategy is set to reinvest to buy the dip as the company's reserves suffer from an aggregated $1 billion in value loss. https://t.co/rr8eqW7Xen

— Cointelegraph (@Cointelegraph) September 10, 2022

Institutional investors headed for a tipping point on crypto: Apollo Capital

Remember when investing in crypto was considered to be a “career risk?” Now, it seems that not investing in digital assets carries the biggest reputational risk of all. What a difference a year can make. According to Apollo Capital chief informatio Henrik Andersson, institutional investors may soon “flip” on their conservative approach toward 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 major institutions, such as pension funds, may be waiting for others to make the first move because nobody wants to be first and be wrong. But, once the floodgates open, not being allocated will be considered a bigger career risk.

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

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

Don’t miss it! Will Ethereum’s Merge alter crypto history?

Ethereum’s Merge has been described as a historical event for the blockchain industry as the largest smart contract platform embarks on a major shift in its governance structure. Whereas most traders are fixated on Ether’s (ETH) price, there’s much more at stake. Will the Merge alter the trajectory of the crypto industry that relies so heavily on Ethereum? Or will it prove to have a negligible impact in the long term? 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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