The state of institutional DeFi

18 Aug 2022

In May of 2022, the collapse of the Terra stablecoin and its Anchor protocol set in motion a string of margin calls and insolvencies, exposing systemic risks in the market, ringing the alarm for risk management and increased diligence, and highlighting the difference between Centralized Finance (CeFi) and Decentralized Finance (DeFi). 

In this report, we reflect on the current state of Decentralized Finance (DeFi) and the challenges and opportunities for institutional investors, using recent events to better understand the structure of the crypto ecosystem.

Here is an overview of the topics covered in the report:

  • DeFi context
  • Managing borrowing risks: understanding 3AC and Celsius
  • The unique risks of on-chain and off-chain lending 
  • Not all DeFi yield is lending-based: Liquidity providing and staking
  • Liquid staking is becoming the bedrock of DeFi
  • How the Ethereum merge will impact staked Ethereum volume
  • The choice for institutional investors - CeFi or DeFi
  • Institutional crypto investors are leaving yield on the table

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