• Interest in DeFi is exploding but the platforms and tools with which investors can participate are still difficult to use, which could slow adoption
  • DeFi Pulse shows there is $50.6 billion in total locked value in DeFi protocols

As bitcoin gets more institutionalized, investors have taken a liking to yield-seeking opportunities in the world of decentralized finance, or DeFi. 

There’s $50.6 billion in total value locked (TVL) in DeFi protocols according to DeFi Pulse. That’s almost 70 times where it was a year ago today, at $769 million. But while interest in DeFi is exploding, the platforms and tools with which investors can participate are still difficult to use, which could slow adoption.

Getting into DeFi

“This area of hybrid finance needs to evolve a lot,” said Matthew Roszak, chairman and co-founder of blockchain infrastructure company Bloq. “What we see in DeFi is there’s some $50 billion in TVL and it’s all crypto-centric capital. But there’s a lot more capital, outside of DeFi, that wants to get into the DeFi.”

In October, Bloq launched a platform called Vesper, which provides a suite of yield-generating products and was built to simplify the DeFi experience for institutional investors. Last week, it broke through $1.5 billion in total value locked. 

Vesper sees a market opportunity for an “evolved professionalized DeFi Platform,” Roszak said, that allows institutional yield seekers to participate more easily. Investors should have greater visibility into what DeFi products are and what they do. The first order of business in building Vesper, he said, was to ensure every contract was audited externally twice for documentation.

“The way I look at a lot of these yield generation products is they’re treadmills for your capital,” Roszak said. “When you open up that treadmill and see what’s underneath the belt there’s an array of complexity.”

For example, one yield generating strategy for its first product, Vesper Grow, involves depositing ETH as collateral to MakerDAO and uses it to take out a DAI loan. The DAI goes to Aave to collect yield, which is used to pay the loan fees and pay for more ETH on the front end, Roszak said. There are about a dozen steps involved, gas fees and a lot of complexity to somebody that wants to generate a high yield.

Vesper Grow allows investors to earn yield on digital assets in the same asset and offers it for ETH, USDC, WBTC and is beta testing LINK.

Simplifying the process

The new Vesper platform simplifies the process. It’s powered by its native token, VSP, which is used to distribute rewards among users and developers, and makes money by charging users a 0.6% fee on withdrawals from Vesper Grow pools, and a 15% platform fee on yield generated by the deposited assets.

Similarly to how every bank and financial institution had bitcoin on the whiteboard five years ago, they all have DeFi on it today – “no question about it,” Roszak said.

“[DeFi] will probably get to $400 billion to $500 billion this time next year and my sense is it’ll grow another order of magnitude after that,” Roszak said. “So we’ll be within a trillion dollars of total value locked within the next two to three years. Once we are, you as a financial institution have to pay attention, figure out where this technology is going and how to participate. It’s critical for them.”

Want to learn more about DeFi? Check out our Investor’s Guide to DeFi.

  • Blockworks
    Senior Reporter
    Tanaya is a business journalist in New York covering financial services and the future of money. Previously, she was an on-air reporter and anchor at Cheddar. She has also worked at Digiday, American Banker and CoinDesk.