Macauley Peterson

Bringing DeFi yields to institutional investors has long been a goal of the crypto industry. Connecting off-chain capital to crypto asset staking brings legal and technical challenges at every step.



Institutional credit infrastructure provider Credora and Polkadot DeFi hub Acala believe they’ve found a path to bridge the gap, starting with a product to bring yield opportunities to bitcoin holders.



Working with Swiss-based market-making firm Portofino Technologies, the initial offering — announced Thursday — targets family offices, credit firms and hedge funds, and expects to return 7%-10% annually.



Past efforts to offer yield to bitcoin (<a href="https://blockworks.co/price/btc">BTC</a>) lenders have not always fared well, with firms such as <a href="https://blockworks.co/tag/celsius">Celsius</a> proving to be opaque, fragile and <a href="https://blockworks.co/news/celsius-to-file-for-bankruptcy-imminently-report">ultimately dangerous</a> places for customers to store BTC.



Credora has devised a legal and technical structure that gives lenders much greater security and transparency, according to co-founder Darshan Vaidya.



“On Acala’s side, it&#8217;s transparency around core yield generation, and on [Credora’s] side, it is around transparency with regards to where exactly funds are at any moment in time, and transparency around the legal structure associated with the loan,” Vaidya told Blockworks.



Their first product is a <a href="https://www.investopedia.com/terms/s/spv.asp">Special Purpose Vehicle</a> (SPV) which generates yield from staking Polkadot’s native currency, <a href="https://blockworks.co/price/dot">DOT</a>.



It works like this: Starting with loaned bitcoin, Portofino exchanges a portion for DOT which is staked with Acala, while hedging price risk using derivatives markets on Bitmex, Bybit or Deribit. Polkadot staking yields fall in the 15%-21% range, Acala’s co-founder Bette Chen told Blockworks.



“For a liquid staking protocol like Acala we aim for, like, a sweet spot — you aim for optimized yield, but at same time [to be] safe for the stakers out there,” she said. Acala uses a variety of dedicated validators including Coinbase Cloud, which provides “slashing protection” — think insurance — for its service.



Portofino is required to provide its own capital into the SPV as a junior tranche, while bitcoin lenders are senior to it, so their assets are secured by the entire cache of funds.



“What we&#8217;ve created is secured lending vehicles which are, by design, bankruptcy remote, so each SPV is legally only able to do a specific activity,” Vaidya explained.



The “first loss” capital provided by the market maker means “their incentives [are] aligned, such that the trading firm is always incentivized to ensure that the senior tranches paid back first,” he said.



In other words, the strategist has “skin in the game,” to use the southern derby race phrase popularized by Warren Buffet. If they don’t deliver on their monthly yield projections, they lose out on their own profits.



Credora provides real-time monitoring for lenders, which Vaidya said will allow them to track the movement of capital — both on-chain and off — in real-time.



He calls it the “anti-principal-lender approach” — referring to the <a href="https://blockworks.co/tag/lending-platform">lending platforms</a> that ran into trouble in 2022, where “there is no transparency in terms of what the principal lender is doing.”



“It&#8217;s in their incentive to offer higher and higher yields to try and capture as much AUM or TVL as possible, and to continually meet that demand — and still make a profit — you have to go further and further out the risk curve,” Vaidya said.



That’s a flawed model, and the antithesis of DeFi ideals.



The current product offering can be seen as a proof-of-concept, but similar SPVs can be spun up in the future with different strategies or input capital — such as <a href="https://blockworks.co/tag/stablecoins">stablecoins</a>.



Once the model is proven out, and perhaps with additional regulatory clarity, Acala’s Chen said, “the next step is now institutions, including potentially fintechs, [to] actually wrap those products and localize them into their retail customers.”



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Bitcoin lenders have a new regulation-friendly option for yield

Jordan Kruger

Just a few short years ago, the allure of double-digit and even higher yields was irresistible.&nbsp;



But since late 2022, these returns have taken on a new light — they&#8217;re too often viewed by skeptics as a potential red flag and a harbinger of risk and instability, rather than the enticing red carpet they once were.



To those skeptics and critics, I say: I still firmly believe DeFi yield will continue to be a vital category. It’s more than just presenting an appealing number — it&#8217;s an essential cog in the machinery of most protocols.&nbsp;



That yield strengthens governance, fuels liquidity provision and increases protocol security; proving that it&#8217;s not just yield for yield&#8217;s sake, but a direct result of technological advancements that improve capital efficiency.&nbsp;



This stands true even in the face of recent adversities. This would include <a href="https://blockworks.co/news/euler-suffers-200m-exploit">the Euler hack</a> of $200 million (<a href="https://blockworks.co/news/euler-exploiter-returns-money">eventually returned</a>), or the Iron Bank <a href="https://twitter.com/ibdotxyz/status/1631310583764242432">incident</a> that saw Alpha Homora’s users&#8217; funds held hostage in an attempt to offset bad debt.



<a href="https://blockworks.co/news/bitcoin-demand-crypto-market-recovery" target="_blank" rel="noreferrer noopener">While DeFi’s recovery</a> may not necessarily take the form of the eye-watering APY users have grown accustomed to, it offers a more sustainable solution and a chance for broader participation. Some users may be fine with taking the risk. However, the focus is gradually shifting from chasing astronomical returns to more calculated strategies, creating opportunities for a larger demographic and financial inclusion.&nbsp;



DeFi is poised to have a renaissance in 2023.



<h2 class="wp-block-heading">Demonstrated resilience in the face of challenges</h2>



Acknowledging the undeniable resilience of DeFi is crucial, as it isn&#8217;t just another catchphrase in the crypto world; It&#8217;s a vital component to crypto’s survival.&nbsp;



Evidence of this dependency can be seen in the events of 2022, wherein centralized entities imploded while DeFi held strong. Numerous projects such as Rocket Pool and Sonne pushed forward, using the so-called &#8220;crypto winter&#8221; that followed as a learning experience to refine their proposition and open up new opportunities to users.&nbsp;



It is during times of turbulence that we, as a community, are given the chance to refine our strategies, reassess our priorities and consolidate our strengths. These challenges serve as the proving grounds for the next generation and enable us to step up and showcase an alternative future that&#8217;s decentralized.



<h2 class="wp-block-heading">Emergence of liquid staking derivatives</h2>



A significant factor in helping weather the storm of 2022 has been the rise of liquid staking derivatives. LSDs saw substantial growth during this period thanks to the promise of the Shapella upgrade — <a href="https://app.blockworksresearch.com/research/2022-year-end-review-protocol-highlights#liquid-staking" target="_blank" rel="noreferrer noopener">4.3 million ETH deposited</a> — despite the market sentiment.



Major contributors such as Lido were able to alleviate concerns through user-friendly and low-barrier-to-entry approaches, promoting more sustainable yield that remained liquid.



Read more from our opinion section: <a href="https://blockworks.co/news/nfts-securities-regulation" target="_blank" rel="noreferrer noopener">It’s a total fool’s errand to regulate NFTs right now</a>



This very process not only gained trust quickly, but also opened the doors wide, enabling anyone with a small amount of capital and slightly less-than-total-degen technical sophistication to participate.&nbsp;



In this new world, geography is irrelevant. Your location or background doesn&#8217;t dictate your ability to earn returns.



Coinbase&#8217;s cbETH, with its <a href="https://defillama.com/protocol/coinbase-wrapped-staked-eth">2.2 billion TVL</a>, is evidence of this shift. It signals a growing acknowledgment of an inclusive financial future where anyone can participate and reap rewards.



<h2 class="wp-block-heading">The promise of layer-2 solutions in finding yield</h2>



Layer-2 solutions have been nothing short of transformative in their impact on the DeFi landscape. For years, Ethereum&#8217;s transaction fees have been a barrier, hindering accessibility and usability for many DeFi participants. However, the emergence of layer-2 solutions has revealed a world of untapped possibilities. These solutions offer significantly lower fees and faster transaction speeds, outperforming the limitations of mainnet, and provide a perfect environment for LSDs to become more inclusive.



These improvements, however, are not just about outperforming mainnet&#8217;s limitations; they are about forging a new path to universal access. Layer-2 solutions provide the perfect launchpad for anyone, irrespective of their location, to engage with DeFi.&nbsp;



Even those who were previously shut out by high costs can now participate and try their hand at various strategies. Should they decide to bow out, they still gain the invaluable experience of navigating a world that was previously inaccessible to them.



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<div class="wp-block-post-author-biography">Jordan Kruger is the Head of DeFi at Bloq and co-founder of Vesper Finance and Metronome.</div>


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DeFi is so much more than just ‘number go up’: It’s a renaissance

James Cirrone

Coinbase <a href="https://www.coinbase.com/blog/coinbase-advanced-is-getting-an-upgrade">said</a> Wednesday that Coinbase Advanced, its trading platform aimed at more sophisticated traders, will offer “up to 4% rewards on the USDC that they hold on Coinbase or on any USDC used in open orders.”



Coinbase <a href="https://twitter.com/coinbase/status/1669480042924228609">launched</a> 4% rewards on USDC for all Coinbase customers on June 15, adding the caveat that the “rate is subject to change and can vary.”



According to an <a href="https://help.coinbase.com/en/coinbase/coinbase-staking/rewards/usd-coin-rewards-faq">FAQ</a> article, Coinbase doesn’t lend out the USDC in its customers accounts, claiming it “has no right to use” those funds.



“USDC Rewards is a loyalty program that is funded with Coinbase’s own funds. The program is designed to incentivize more of our customers to use Coinbase services to store their USDC,” the FAQ continued.&nbsp;



The 4% yield offering is significant because it rivals what major banks give in terms of APY for their high yield savings accounts.



Apple’s savings account, <a href="https://blockworks.co/news/apple-card-savings-account-compare-crypto">which launched in April and is tied to its credit card</a>, offers 4.15% APY.&nbsp;



And according to <a href="https://www.bankrate.com/banking/best-online-banks/">Bankrate</a>, which tracks and rates financial products, there are a handful of savings accounts that surpass Coinbase’s 4%. Capital One has an account that, like Apple, offers 4.15% APY.



Coinbase Lend, a program that faced regulatory hurdles and was ultimately abandoned due to threats of legal action by the SEC, had initially <a href="https://www.coinbase.com/blog/sign-up-to-earn-4-apy-on-usd-coin-with-coinbase">planned</a> to offer traders a 4% APY on USDC as a reward. Although the program was announced in 2021, it was later canceled.



Lend, unlike what Coinbase is offering now, would have loaned out the USDC in customer accounts “<a href="https://web.archive.org/web/20210909081423/https://www.coinbase.com/lend">to verified borrowers</a>.” If users had chosen to participate in the program, there was a potential risk that their funds would no longer be held under Coinbase&#8217;s custody. 



“This is a wholly separate offering from Lend, as USDC holders on Coinbase receive these rewards simply for holding USDC in their Coinbase accounts,” Coinbase told Blockworks.



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Coinbase offering 4% yield on USDC held by customers, rivaling major banks

Bessie Liu

Sommelier has introduced five new vaults that offer holders of governance tokens an opportunity to earn passive yield ranging from 2% to 4%. Supported tokens include 1inch, ENS, LINK, SNX and UNI.



The strategy itself was designed by data research firms Seven Seas Capital and Define Logic Labs, the team behind <a href="https://blockworks.co/news/sommelier-eth-liquid-staking-vault">Real Yield ETH</a>.



Existing governance tokens in DeFi offer minimal yield opportunities. Lending these tokens out on Aave, for example, will earn holders sub 1% yield. Sommelier’s new vaults are designed to fill that void, Zaki Manian, the company’s co-founder told Blockworks.&nbsp;



These latest vaults are designed to capture the huge arbitrage opportunity in the ETH market, Manian explained.&nbsp;



“There’s a massive amount of ETH sitting idly loaned out on protocols like Aave, and the borrow cost of ETH is around 4%. Meanwhile, yield opportunities on ETH are significantly higher. At a high-level, these gov token vaults capture that arbitrage and convert it into UNI, LINK, ENS, etc. yield,” he said.



When users deposit into these new vaults, their governance tokens are used as collateral to borrow ETH. That ETH is then deposited into Sommelier&#8217;s Real Yield ETH vault, where the assets generate yield through looped leverage and the optimization of tick range liquidity on Uni V3.



“Looped leverage does come with liquidation risk, but the Real Yield ETH vault is equipped to mitigate that risk by constantly monitoring market conditions and adjusting leverage ratios as needed,” he said.



Another important feature that these new vaults offer will be “gas holidays.”



The vault will be holding a simple position when rewards are being harvested, which means that the vault will periodically move into one associated governance token — lowering any gas costs.&nbsp;



“The first window is the first 48 hours after launch, and then depositors will be notified when there are subsequent gas holidays. As with all Sommelier vaults, they’re non-custodial, so you can enter and exit at any time, but this helps people depositing smaller amounts who are more sensitive to high gas fees,” Manian said.



The first 40 addresses to deposit over $1,000 in liquidity in each vault will each be given an additional $25 in rewards. US-based traders will not have access to Sommelier vaults.



Updated June 6, 2023 at 11:01 am ET: Added clarification on vault usage.



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5 New Sommelier Vaults Now Capturing Governance Token Yield

Self-custody wallet Giddy has integrated with Bitrefill to enable users to pay for everyday consumer items with cryptocurrency yield.



Users on the Giddy app can access DeFi lending pools and general DeFi protocols to earn yield through their investments. This means that users will not need to touch their initial deposit when purchasing goods from the real world.&nbsp;



“It&#8217;s an integration that brings kind of a real-world connection between crypto, blockchain and actually using that money for something,” Eric Parker, CEO at the Salt Lake City startup, told Blockworks. 



“Since we’ve had this integration, we’ve been testing it internally. What I’ll do is take a portion of my yield, purchase some Ethereum, stick it in a liquidity pool and as that earns yield, I’m converting that directly to gift cards,” Parker said.



On top of offering general DeFi services, the <a href="https://giddy.co/" target="_blank" rel="noreferrer noopener">Giddy</a> app separately offers what Parker calls auto-compounding yield.



“Instead of manually harvesting rewards and then re-compounding [re-staking], we have a service on top of these protocols that automatically takes your rewards and re-compounds it into that protocol in a gas free way,” he said.



Users of the Giddy app also do not need to generate a seed phrase due to account abstraction capabilities built by the team.



Gas fees can be paid using USDC or the GIDDY token, so it won’t be necessary to hold multiple different tokens. GIDDY has fallen 97% since its all-time high recorded just after its launch last April.



<h2 class="wp-block-heading">Giddy users may still need to KYC for gift cards</h2>


<div class="wp-block-image">
<figure class="alignright size-large is-resized"><img decoding="async" loading="lazy" src="https://blockworks-co.imgix.net/wp-content/uploads/2023/06/photo_2023-06-01_16-30-05.jpg?w=1024&amp;h=1024" alt="" class="wp-image-57567" width="167" height="363" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2023/06/photo_2023-06-01_16-30-05.jpg?w=590 590w, https://blockworks-co.imgix.net/wp-content/uploads/2023/06/photo_2023-06-01_16-30-05.jpg?w=138 138w, https://blockworks-co.imgix.net/wp-content/uploads/2023/06/photo_2023-06-01_16-30-05.jpg?w=472 472w, https://blockworks-co.imgix.net/wp-content/uploads/2023/06/photo_2023-06-01_16-30-05.jpg?w=118 118w, https://blockworks-co.imgix.net/wp-content/uploads/2023/06/photo_2023-06-01_16-30-05.jpg?w=120 120w, https://blockworks-co.imgix.net/wp-content/uploads/2023/06/photo_2023-06-01_16-30-05.jpg?w=101 101w, https://blockworks-co.imgix.net/wp-content/uploads/2023/06/photo_2023-06-01_16-30-05.jpg?w=37 37w" sizes="(max-width: 167px) 100vw, 167px" /><figcaption class="wp-element-caption">Giddy users should see a &#8220;Buy Gift Cards With Crypto&#8221; option when cashing out</figcaption></figure></div>


Bitrefill currently has 656 different retail partners in the United States, mainly larger corporations ranging from TJ Maxx, Chipotle, Spotify, H&amp;M and Nintendo and over 5,600 retail partners worldwide.



A Mastercard partnership means gift cards can be spent at any store — online or in person — that accepts Mastercard. Users can buy Mastercard gift cards up to $10,000 if they’ve provided identity information for know-your-customer (KYC) controls. Otherwise, the limit is $200.



Most of these gift cards are limited to the country in which they are purchased and cannot be used outside of the country.



Although users do not have to reveal their identities when purchasing most gift cards, Bitrefill will report suspicious purchases and transactions, and users may be prompted to complete a KYC program to continue using its services.



<h2 class="wp-block-heading">Keeping gift card delivery safe</h2>



With this latest partnership, users can create an order on the Giddy wallet through the Bitrefill integration that can be accessed from the Giddy user interface.&nbsp;



From there, Bitrefill will create a one-time use address to which the user can send crypto, and they will later send you a gift card through your email address or preferred delivery method.&nbsp;



Supported cryptocurrencies include bitcoin (as well as Lightning Network), ether, USDC, USDT, litecoin, dogecoin, DASH. Users can also use Binance Pay and the over 200 cryptocurrencies offered for Binance users.



Parker explains that when the gift card is delivered to a user, it will be sealed.&nbsp;



“[This] means that they don’t just send plain text, they send you a web object that you have to interact with to verify your identity before you can get your gift card out,” he said.



Bitrefill has already partnered with a handful of other popular crypto wallets including Binance Pay, Coinbase, Kraken, Trust Wallet and Bitfinex.



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Giddy Partners With Bitrefill to Bring DeFi Yield to Gift Cards

The rising 10-year yield on US Treasury bills, which increased by four basis points to 3.506% on Monday, is now higher than many yields that can be earned via DeFi protocols.&nbsp;



The Treasury yield increase hit on Monday as Federal Reserve Chair Jerome Powell suggested interest rate hikes could soon come to an end. The 10-year Treasury yield is one metric of investor confidence in the US market.&nbsp;



At 3.506%, its yield over a decade is now clocking in higher than many DeFi yield-bearing opportunities.&nbsp;



In DeFi, investors often earn yield through <a href="https://blockworks.co/news/what-is-yield-farming-what-you-need-to-know">yield farming</a>, that is, the process of earning rewards through providing liquidity to token pairs or trading pools.



Decentralized protocols such as Aave, Curve and Compound are often used to facilitate yield farming.&nbsp;



Aave’s annual percentage yield (APY) on stablecoins such as USDC, USDT and DAI are currently at <a href="https://app.aave.com/reserve-overview/?underlyingAsset=0xa0b86991c6218b36c1d19d4a2e9eb0ce3606eb48&amp;marketName=proto_mainnet_v3">2.57%</a>, <a href="https://app.aave.com/reserve-overview/?underlyingAsset=0x6b175474e89094c44da98b954eedeac495271d0f&amp;marketName=proto_mainnet_v3">2.43%</a> and <a href="https://app.aave.com/reserve-overview/?underlyingAsset=0xdac17f958d2ee523a2206206994597c13d831ec7&amp;marketName=proto_mainnet_v3">2.71%</a> respectively.



Compound’s APY for these tokens sit at <a href="https://app.compound.finance/markets?market=v2">1.93%</a>, <a href="https://app.compound.finance/markets?market=v2">2.50%</a> and <a href="https://app.compound.finance/markets?market=v2">1.66%</a>.&nbsp;



Curve’s <a href="https://curve.fi/#/ethereum/pools/3pool/deposit">3pool</a>’s base APY is at <a href="https://curve.fi/#/ethereum/pools">0.07%</a> with<a href="https://curve.fi/#/ethereum/pools"> 0.52% – 1.32% in token APY rewards</a>.



<h3 class="wp-block-heading">Varying DeFi yields may beat Fed’s rate</h3>



Although such large DeFi players may not be currently offering higher yields than the Treasury, DeFi yields do vary across the board.&nbsp;



Liquid staking derivatives and service providers on Ethereum — such as Lido, Rocket Pool and Frax Finance — have been offering alluring alternatives to US-backed bonds.&nbsp;



Staking is the <a href="https://blockworks.co/news/liquid-staking-derivatives-shanghai-upgrade">process of locking up tokens</a> to participate in the network security of a proof-of-stake blockchain.&nbsp;



Liquid staking derivatives enable token holders to put their tokens that would otherwise sit idly to use, and these protocols have since become a popular investment model.



Lido, <a href="https://blockworks.co/news/lido-upgrade-almost-live">one of the largest staking protocols</a>, with over <a href="https://lido.fi/ethereum">6.6 million</a> ether (<a href="https://blockworks.co/price/eth">ETH</a>) staked on its platform, offers a 6.0% annual percentage rate (APR) to customers who lock their ETH onto its platform.&nbsp;



Similarly, Rocket Pool offers around <a href="https://rocketpool.net/#security">5.17% APR</a> in ETH to customers interested in participating in staking — and around <a href="https://rocketpool.net/#security">6.98% APR</a> in ETH and rocket pool rewards to those interested in running a node and stake on its platform.



Frax Finance, especially, is offering attractive returns. Its VST/FRAX <a href="https://app.frax.finance/staking/curve-frax-vst">pool</a> is offering a base of 6% APR to stakers, but its base APR could be upwards of 20%.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">The summary of the FXS thesis is as follows. FRAX has an advantage over other LSD platforms at the moment due to their outsized CRV/CVX treasury holdings. This allows them to stimulate higher ETH staking yield on their staked ETH derivative product than the rest of the market. <a href="https://t.co/ODdkHjxq1O">https://t.co/ODdkHjxq1O</a>&mdash; Hal Press (@NorthRockLP) <a href="https://twitter.com/NorthRockLP/status/1615203659968835584?ref_src=twsrc%5Etfw">January 17, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Ethereum is not the only network offering attractive staking solutions. Abundant liquid staking options are also available via Cosmos and Solana as well.&nbsp;



Like all other investments, there are risks associated with staking.&nbsp;



The crypto yield-bearing process staking facilitates can be quite volatile, and the underlying token prices could change quickly due to variable market conditions.&nbsp;



Errors with validator nodes can also be possible, and some tokens may require lock-up periods.



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Some DeFi Yield Could Still Be Higher Than 10-year US Treasurys

Michael Bodley

Old Street Digital, a London crypto asset manager that has quietly assembled a team chock full of deeply credentialed investment veterans, has hit a snag: raising the kind of institutional capital its traders are used to trading.&nbsp;



Old Street Digital (OSD) has less than $10 million of assets under management — a drop in the financial bucket from what OSD Chief Investment Officer Gary Clarke handled at <a href="https://blockworks.co/tag/blackrock" target="_blank" rel="noreferrer noopener">BlackRock</a>, where he headed up the traditional finance giant’s global equity team.&nbsp;



From 2014 to 2016, according to Clarke’s LinkedIn, he oversaw a team of US and United Kingdom portfolio managers running more than $30 billion at BlackRock — otherwise known as the world’s largest asset manager.&nbsp;



Old Street has been pushing to raise the kind of external money its team is accustomed to, according to two sources familiar with the matter, confidential firm marketing materials obtained by Blockworks and United Kingdom FCA regulatory records.&nbsp;



Read more: <a href="https://blockworks.co/news/uk-tougher-on-crypto-companies">UK Denies Crypto Companies the US Lets Operate</a>



Even as digital asset markets have stabilized and bounced back from near historic lows in the fourth quarter of 2022, that effort evidently hasn’t been easy.&nbsp;



The firm’s latest pivot: recently tapping perFORM Due Diligence of London to conduct a review of its operations and trading functions. Run by Quentin Thom and James Newman, perFORM, started out as a traditional finance due diligence firm. But it’s since expanded into conducting reviews of crypto service providers and funds.&nbsp;&nbsp;



In an exclusive interview with Blockworks, Old Street Chief Executive Officer Paul Ridley said the crypto industry is “still in the super early days” when it comes to the level of limited partner dry powder that has fueled the rise of traditional finance fund managers for decades.&nbsp;



The core team Ridley works with at Old Street are all used to trading or overseeing the back and middle-office operations of a slew of strategies deploying north of $1 billion, Ridley said. The Old Street head’s resume includes stints at investment bank Nomura and Boston Consulting Group, and he has personal experience in the crypto sector.&nbsp;



And Chief Operating Officer Nic Basson joined the firm after spending nearly four years at alternatives giant Invesco, where he worked in senior roles focusing on emerging markets, including retail products, according to his LinkedIn.&nbsp;&nbsp;



“We’ve all had to adjust our definition of small,” Ridley told Blockworks.&nbsp;



He declined to comment on investor communications and the marketing materials obtained by Blockworks, citing regulatory restrictions in the United Kingdom.



<h2 class="wp-block-heading">Top backers, not top capital&nbsp;</h2>



Old Street, named for the historic mile stretch of London that has been a hotbed of hedge fund traders and their courting service providers for as long as anyone in the city’s traditional finance scene can remember, has no shortage of brand name backers behind it.&nbsp;



It’s the kind of firm that doesn’t need publicity and doesn’t seek it out. It’s the kind of firm that shouldn’t have this tough of a time raising serious dollars and pounds from pension advisors, top family offices and endowments.



Ten million dollars under management these days is no small sum for upstart crypto funds looking to take on the industry’s deep rooted native players — the likes of Pantera Capital and maybe even Grayscale Investments or Galaxy Digital one day.&nbsp;



Ridley’s team locked down a $2.8 million seed round in August 2022 led by Draper Associates, according to a <a href="https://www.prnewswire.co.uk/news-releases/old-street-digital-announces-2-8m-seed-funding-round-led-by-draper-associates-876490141.html" target="_blank" rel="noreferrer noopener">statement</a> from the time. It included participating investors like Plassa Capital, plus “prominent venture capital and angel investors across Europe, Asia and the U.S. as well as senior executives from the U.K. Asset Management industry,” the statement said.



Tim Draper, the near household name venture capitalist who founded Draper Associates, then said in the statement that Old Street’s team brought a “unique approach” that “applies traditional fund-management expertise to the world of crypto.”



That approach has yet to fully mesh, at least when measured by outside limited partner capital raised so far. But Ridley told Blockworks he and his team are playing the long game in an industry that has been beset by a lack of traditional finance understanding and regulatory hurdle after hurdle.&nbsp;



“What we wanted to do was take a bunch of traditional finance asset management [types], bring them together and try to build a really reputational product that would be the sort of thing that BlackRock would build, that T Rowe [Price] would build,” he said. “The kind of really clear, focused product which is the kind of thing institutions should be buying — pension funds, endowments, sovereign wealth funds.”



Asked the difference between an institutional investor in traditional finance and an institutional investor in digital assets, Ridley said that his London financial circle “have been talking about exactly that” on and off in 2023.



“No one knows what a real institutional investor is in this space — still,” he said.&nbsp;



<h2 class="wp-block-heading">Stablecoin yield for TradFi types</h2>



That said, the team has operational capital from its $2.8 million seed round, and Ridley is projecting patience in terms of really getting things going.&nbsp;



One of Old Street’s core strategies, which it dubs in investor marketing materials as the “Old Street Digital Crypto Cash Management Solution,” had delivered a gross annualized return of 11.7% from its inception in the fourth quarter of 2022 through the end of February.&nbsp;



It targets an 8 to 15% annual return, per the same materials, by following a strategy that makes stablecoin investments across DeFi protocols. There’s monthly liquidity under the commingled structure, which the marketing materials say has had zero down months.&nbsp;



It’s intended to appeal to both traditional finance backers and crypto native investors looking for yield in the wake of Silicon Valley Bank (SBV) folding — as well as the likes of Signature Bank, two of the sources said.&nbsp;



It invests in “blue chip” pools of DeFi assets, engaging in collateralized lending, also known as yield farming, and it’s been marketed in a way that might appeal to credit investors with an appetite for risk beyond plain vanilla bonds. Old Street isn’t exactly going after the distressed debt TradFi crowd here, sources said.&nbsp;



The marketing materials list a number of US stablecoins, including <a href="https://blockworks.co/price/usdt" target="_blank" rel="noreferrer noopener">USDT</a>, <a href="https://blockworks.co/price/usdc" target="_blank" rel="noreferrer noopener">USDC</a>, <a href="https://blockworks.co/price/busd" target="_blank" rel="noreferrer noopener">BUSD</a>, <a href="https://blockworks.co/price/dai" target="_blank" rel="noreferrer noopener">DAI</a>, <a href="https://blockworks.co/price/fxs" target="_blank" rel="noreferrer noopener">FRAX</a>, <a href="https://blockworks.co/price/tusd" target="_blank" rel="noreferrer noopener">TUSD</a>, <a href="https://blockworks.co/price/usdp" target="_blank" rel="noreferrer noopener">USDP</a>, <a href="https://blockworks.co/price/usdd" target="_blank" rel="noreferrer noopener">USDD</a> and <a href="https://blockworks.co/price/gusd" target="_blank" rel="noreferrer noopener">GUSD</a>.&nbsp;



It’s intended to be the safe play that limited partners with billions of dollars at their disposal ought to be able to grasp: low volatility, at least so far, coupled with the inherent transparency of blockchain technology. The crypto cash play doesn’t take directional bets and prominently states in its marketing materials that it has “zero exposure to Bitcoin, etc.”&nbsp;



And it’s being shopped around to investors as combining quantitative elements with fundamental research — the kind of “quantamental” language that Wall Street types ought to be able to grasp, might be able to get behind.&nbsp;



It holds assets held by Old Street on-chain, which the firm says results in “access to opportunities not possible off-chain.”&nbsp;



Crypto custodian Fireblocks, as well as the FCA-regulated TrustVault, have been put in place as counterparties on Old Street’s multi-signature solution to safekeeping client cryptoassets, according to the materials.&nbsp;



<h2 class="wp-block-heading">The crypto long haul</h2>



The collapse of FTX and the crypto meltdown that marked the end of last year didn’t help the grand capital raising aspirations of Old Street and its competitors.&nbsp;



Macro conditions and regulatory concerns aside, though, Ridley said that the disconnect between household crypto names and household finance names is still frustrating, at least at times, across the board.



In describing Clarke’s credentials, Ridley said he was “pretty much at the top of the profession…in the equities world” when he was running $30 or so billion at BlackRock.



Clarke is 54 and is a “fund management nerd first, but he’s alternative enough to have a cool haircut, and spend his time thinking about tokens now,” the Old Street chief executive said.&nbsp;



“I always argue that he’s a bigger name than [Mike Novogratz, the founder of Galaxy Digital] is,” Clarke said. “It’s just that no one gives a shit about equities. And we’ll stand on a stage and yell and scream and sweat or whatever, right…To make a long story short, we&#8217;re trying to approach crypto in a different way that we think is going to be much more attractive to be the biggest kind of investors out there. Despite everything that&#8217;s going on in the crypto market and whatever.”



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Former BlackRock Global Equities Head Running Crypto Fund

Shalini Nagarajan

Apple just released a new high-yield deposit account in partnership with Goldman Sachs, and users are already excited that it promises a better rate than most banks. But what about crypto and DeFi?



The feature enables Apple Card users to grow their Daily Cash rewards — the cashback rewards for using the card — by placing them in a savings account that offers an annual percentage yield (APY) of 4.15%.



Apple&#8217;s rate is more than 10x the national average, <a href="https://www.apple.com/newsroom/2023/04/apple-cards-new-high-yield-savings-account-is-now-available-offering-a-4-point-15-percent-apy/" target="_blank" rel="noreferrer noopener">Apple said</a>, citing data from the Federal Deposit Insurance Corporation. Users can set up their savings accounts with no minimum deposits and no minimum balance requirements.



For comparison, Coinbase offers <a href="https://www.coinbase.com/learn/tips-and-tutorials/how-to-earn-crypto-rewards#:~:text=Via%20the%20main%20Coinbase%20app,com%2Fstaking%20to%20learn%20more." target="_blank" rel="noreferrer noopener">up to 6%</a> APY on staking certain assets including ETH, Tezos or Cosmos. Bybit also offers <a href="https://www.bybit.com/en-US/earn/home/" target="_blank" rel="noreferrer noopener">up to 6%</a> APY on staked ETH.&nbsp;



But those are volatile crypto assets for which some of the yield can be a result of token inflation. It’s not an apple to Apple comparison.



Limiting a search for crypto yields to stablecoins, we can find Crypto.com offering <a href="https://crypto.com/product-news/crypto-earn-updates-available-tokens" target="_blank" rel="noreferrer noopener">4.5%</a> on USDC, DAI and USDT, with a 3-month lockup, but only if customers additionally stake a balance of the exchange’s CRO token.



<a href="https://blockworks.co/category/defi">DeFi</a> has the advantage of global permissionless access, but basic savings yields are generally lower than those from Apple’s product, although the latter is currently available to only US-based users.



Borrowing and lending protocols Aave and Compound have variable supply rates currently around 2%, according to <a href="https://defiprime.com/defi-rates" target="_blank" rel="noreferrer noopener">defiprime</a>, while relative newcomer <a href="https://www.notional.finance/lend" target="_blank" rel="noreferrer noopener">Notional Finance</a>, offers fixed rate lending of DAI and USDC at between 5.9% and 6% with a 3-month term.



Apple’s offering is more flexible and benefits from FDIC insurance, while DeFi alternatives are uninsured by default. To protect against certain smart contract risks, via insurance protocol <a href="https://app.nexusmutual.io/cover" target="_blank" rel="noreferrer noopener">Nexus Mutual</a>, will set you back about 1.5-2% annually for Compound and Aave. And there is currently no capacity available to insure Notional Finance positions.



Aside from its global reach, with no need to jump through any hoops to open an account, DeFi has one other feature users may appreciate: deposits can simultaneously be used as collateral to borrow.



For instance, a USDC deposit on Compound can be used to borrow ETH which can then be staked elsewhere to earn a return. That can make the yields available more competitive, but also introduces complexity, such as the need to monitor collateral ratios to ensure there’s no risk of liquidation and to take on additional smart contract risk.



<h2 class="wp-block-heading">Apples to others comparison</h2>



Rick McCracken, a Cardano stake pool operator, said on <a href="https://twitter.com/RichardMcCrackn/status/1648052395245436928" target="_blank" rel="noreferrer noopener">Twitter</a> that it was hard to pass up on Apple’s 4.15% APY as he was already using Apple cashback.



“Now I have to see if I am earning better returns on my crypto rewards on the Coinbase card or if this [Apple] deal is better,” he said.



Apple Card users don’t have to rely only on their cashback rewards as a base to grow their returns. They can also add money to this savings account directly from an existing bank account, meaning you can transfer a chunk of funds if you wish to do so.



“Our goal is to build tools that help users lead healthier financial lives, and building Savings into Apple Card in Wallet enables them to spend, send, and save Daily Cash directly and seamlessly — all from one place,” Jennifer Bailey, vice president of Apple Pay and Apple Wallet, said in a statement.



Apple’s announcement follows customers deciding to move their funds from smaller lenders to banking giants after the failures of Signature Bank and Silicon Valley Bank.



Although Apple’s product doesn’t provide the highest available APY, it is useful for those who already have Daily Cash from their use of Apple Card. Still, Apple warned that the APY may change at any time.



For those new to crypto, finding yields competitive to Apple’s savings product, without taking degen-like risks, is a challenge — especially in a macro environment where <a href="https://ycharts.com/indicators/3_month_t_bill" target="_blank" rel="noreferrer noopener">3-month Treasury bonds</a> are at 5%. But the DeFi landscape is evolving fast, and consumer-focused offerings with low fees and features like built-in insurance are sure to follow.



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How Does Apple Card’s New Savings Account Compare to Crypto?

Sebastian Sinclair

<div id="highlights-block_63564bea7db36" class="highlights">
 <ul>
 <li>Freeway claims a total of $161 million in so-called &#8220;Superchargers&#8221; currently reside within its ecosystem</li>
 <li>Users have been barred from withdrawing funds with no timeline offered for when services will restart</li>
 </ul>
 
</div>



Crypto investment startup Freeway has suspended service in response to “unprecedented” volatility in foreign exchange and crypto markets, again calling into question the long-term viability of centralized platforms offering high yield.



The Seychelles-registered platform tweeted Sunday it would not be buying back users&#8217; Supercharger Simulations — financial products that offered users up to 43% yield — until further notice.



“Freeway has therefore decided to diversify its asset base to manage exposure to future market fluctuations and volatility ensuring the long term sustainability and profitability of the Freeway ecosystem,” the platform said in its <a href="https://twitter.com/FreewayFi/status/1584213303399567361" target="_blank" rel="noreferrer noopener">tweet</a> and via a website <a href="https://freeway.io/" target="_blank" rel="noreferrer noopener">notice</a>.



Freeway’s native token FWT dropped more than 75% following its decision to suspend its platform, now down 96% since its peak last May. 



No further information was provided with regard to exactly how Freeway would diversify its asset base. A spokesperson for Freeway was not immediately available for comment.



The move echoes those made by now-bankrupt crypto lenders <a href="https://cms.blockworks.co/celsius-banks-on-future-with-new-name-kelvin/" target="_blank" rel="noreferrer noopener">Celsius</a> and <a href="https://cms.blockworks.co/voyager-seeks-strategic-alternatives-following-pause-to-withdrawals/" target="_blank" rel="noreferrer noopener">Voyager</a> — some of the largest in the space — as they went into a tailspin earlier this year. 



Typically, users stake crypto or fiat with Freeway and buy so-called “Superchargers,” which can then be sold back at a later date, unlocking yield and the initial funds. The IOUs are meant to emulate crypto and fiat currencies such as bitcoin and USD.



Now, users are unable to sell their Superchargers back to the platform, which is still in beta. Freeway claims $161 million in Superchargers currently reside within its ecosystem.



Under the platform’s <a href="https://freeway.io/wp-content/uploads/2022/04/Freeway-TCs-non-US.pdf" target="_blank" rel="noreferrer noopener">terms and conditions</a> for non-US users, Freeway advises new signups that the platform “may be down for a limited or extended period of time,” such as maintenance and upgrades.



<h3 class="wp-block-heading">No clear road for Freeway</h3>



Freeway is yet to give a timeline for when it might reinstate services, leaving users stuck without much recourse. Prominent crypto commentator <a href="https://twitter.com/FatManTerra/status/1584247387941351424?s=20&amp;t=rmKZZXFVD2fRhnvJJ574hQ" target="_blank" rel="noreferrer noopener">FatMan tweeted</a> to highlight that Freeway had also scrubbed team member names from its website.



A representative on Telegram told users they did not know if they would be able to withdraw funds and advised them to submit a support ticket.



“Freeway collapsed and I&#8217;m just wondering if I will still manage to be one of the last to withdraw. People here are still in denial that they lost everything and should face it straight away,” one disgruntled user said.



At the beginning of this month, the project’s co-CEO, Sadie Hutton, said in a <a href="https://www.youtube.com/watch?v=Nopr5boES34&amp;ab_channel=Freeway" target="_blank" rel="noreferrer noopener">YouTube presentation</a> that a looming global recession and high levels of inflation had dogged markets, but Freeway stood poised to end 2022 “with a bang.”



Hutton said the platform had posted a net positive growth of $1.8 million in users’ Superchargers in the third quarter of 2022.



“When you consider the price of bitcoin dropped over 30% in the month of June alone, is a very strong signal to our community and to anyone looking for projects standing strong amid the bear market turmoil…Freeway has a very clear runway ahead.”



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Crypto Yield Platform Freeway Halts, Token Tanks 75%

<div id="highlights-block_62eabd6f0e0f2" class="highlights">
 <ul>
 <li>MNYe will have a streaming fee of 0.95% (95 bps)</li>
 <li>Token holders will be able to benefit from the opening of the perpetual short position</li>
 </ul>
 
</div>



<a href="https://indexcoop.com/about-index-coop" target="_blank" rel="noreferrer noopener">Index Coop</a> has launched a new token on Ethereum’s Optimism layer-2 network that gives holders access to USD-denominated yields.



The Market Neutral Yield token (MNYe) utilizes basis trading, also known as cash and carry arbitrage, by plugging into derivatives platform Perpetual Protocol and Uniswap V3.



Under the hood, the MNYe token will automatically open a futures position on Perpetual Protocol while buying an offsetting position from <a href="https://cms.blockworks.co/tag/uniswap/" target="_blank" rel="noreferrer noopener">Uniswap</a> V3, creating a market-neutral position.



<a href="https://www.linkedin.com/in/allan-gulley/" target="_blank" rel="noreferrer noopener">Allan Gulley</a>, product manager at The Index Cooperative, explains that there will be no price exposure regardless of what the price of ether (ETH) happens to do because “we are short ETH in Perpetual Protocol and we are long ETH with the assets we get from Uniswap, and those two ETH positions offset each other.”



This kind of trading strategy is most commonly performed by hedge funds and experienced financial professionals in traditional finance.&nbsp;



“It’s not familiar to most people,” Gulley said. “But now it’s fairly safe and accessible to anyone who wants to understand it and wants to experiment with it, and that’s what gets us really excited.”



By owning MNYe, token holders will be able to benefit from the opening of the perpetual short position as they will be paid a funding rate — or what Gulley describes as dollar-denominated payments — multiple times a day.



“What we’re doing is farming that funding, so we maintain that short, perpetual position, and there’s a spot position to offset it,” Gulley said. “That’s what causes the value, or the interest, to accrue to the value of the token.”



Margin requirements for the perpetual position are automatically managed by the token, Gulley said. “USDC is deposited as collateral and used to open the short ETH perp position, the token maintains a conservative collateralization ration to avoid liquidation.”



MNYe will be Index Coop’s second yield bearing product, after the Interest Compounding ETH Index (icETH) — that enhances staking returns with a leveraged liquid staking strategy.&nbsp;



Token holders will be charged an annual streaming fee of 95 basis points, or 0.95%, for owning the token. The fee will be revenue for Index Coop to continue building and sustaining its products.



US IP addresses are currently restricted from buying the MNYe token from the Index Coop app — a nod to regulatory uncertainty around the securities implications for such a token — but non-US persons can access the cryptoasset on secondary markets from Uniswap or decentralized exchange aggregators, Gulley said.



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Earning Yields Just Became Easier With Index Coop’s Latest Token

Jocelyn Yang

<div id="highlights-block_62b19d97ac78c" class="highlights">
 <ul>
 <li>USD Coin interest rates are lower than four-week Treasury bills amid the crisis</li>
 <li>Despite a bear market, analysts think going forward the rates of DeFi will come closer to being in-line with, if not above, traditional markets</li>
 </ul>
 
</div>



The DeFi space has seen a sharp drop off as the market continued to be battered following <a href="https://cms.blockworks.co/celsius-withdrawal-halt-reveals-run-risks-on-other-crypto-banks/" target="_blank" rel="noreferrer noopener">Celsius</a>&#8216; liquidity crisis and the butterfly effect going on this week. The ability to generate low-risk yield in DeFi (decentralized finance) has fallen, followed by an outflow of liquidity, hitting stablecoins&#8217; interest rates in the lending market. 



USD Coin (USDC) interest rates on money market protocol <a href="https://app.aave.com/markets/" target="_blank" rel="noreferrer noopener">Aave</a> stand at 0.76% and on <a href="https://compound.finance/markets" target="_blank" rel="noreferrer noopener">Compound</a> at 0.24% as of Tuesday at 6:00 am ET — both lower than the latest 1.18% yield on <a href="https://ycharts.com/indicators/4_week_treasury_bill_rate#:~:text=4%20Week%20Treasury%20Bill%20Rate%20is%20at%201.16%25%2C%20compared%20to,long%20term%20average%20of%201.15%25." target="_blank" rel="noreferrer noopener">four-week Treasury bill</a> — reversing the scene from the bull market. 



“Some people called it a utopian virtuous cycle. Others just called it greed,” analyst Ben Giovo <a href="https://newsletter.banklesshq.com/p/is-defi-ded" target="_blank" rel="noreferrer noopener">wrote</a> in Bankless’ newsletter. “The thing is: reflexivity cuts both ways.”



On-chain activity fell as prices dropped, which made deploying capital in DeFi less attractive as returns are lower, he explained in the post. 



In May, the top four stablecoins market capitalization <a href="https://cms.blockworks.co/top-stablecoins-shed-7b-in-may-as-traders-redeem-tokens-en-masse/" target="_blank" rel="noreferrer noopener">fell by nearly $7 billion</a> as investors looked to redeem their tokens for cash. After all, why take the risk of holding stablecoins at all, if there’s nowhere to generate a safe yield in excess of the traditionally risk-free rate?



Yet, Giovo wasn’t overly concerned, arguing that “DeFi lenders are intersecting with meatspace businesses to get this jack out of its box.”



Dustin Teander, research analyst at Messari, agreed, thinking the lower deposit rates compared to traditional markets are due to a smaller serviceable market rather than a structural shortcoming of the protocols. 



“At its present state, the business of DeFi lending is largely limited to funding shorter-term, speculative trading leverage,” he told Blockworks. During a bull market, borrowers were willing to pay up for leverage. But now, <a href="https://cms.blockworks.co/crashing-prices-expose-bitcoin-mining-industrys-addiction-to-leverage/" target="_blank" rel="noreferrer noopener">deleveraging is de rigueur</a>.



<blockquote class="wp-block-quote">“As we have seen prices decline, the demand for leverage and borrowing has significantly pulled back, ultimately lowering deposit rates in the process.”</blockquote>



Teander believes that going forward, the rates of DeFi will “come closer to being in-line, if not above, traditional markets&#8221; along with the expansion of serviceable markets. He highlighted protocols have already built lending businesses that are more integrated with traditional markets, such as MakerDAO’s real-world asset lending and <a href="https://cms.blockworks.co/aave-arc-to-provide-30-financial-institutions-access-to-private-pools-of-defi-liquidity/" target="_blank" rel="noreferrer noopener">Aave’s Arc</a> protocol. 



“Over time, this will open the door for DeFi deposit rates to decouple away from being purely driven by speculative trading demand and move to be more commerce-driven as seen in traditional markets,” he said.



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Is There a Silver Lining in DeFi Yield Inversion?

<div id="highlights-block_620edea50be2c" class="highlights">
 <ul>
 <li>Crypto payments firm BCB Group has debuted its yield product aimed at professional investors</li>
 <li>Clients can choose to lock up either crypto or fiat for a 2% return when denominating in euros</li>
 </ul>
 
</div>



Crypto payments and trading firm BCB Group debuted its dual fiat and crypto yield product Monday in the EU, a day after BlockFi was forced to pay $100 million in fines to regulators over its lending product in the US.



The company said its BCB Yield product offers clients &#8220;multiple options&#8221; to earn a return on their balance via its BCB Securities Fund, according to a press release on Monday. The fund, BCB claims, is a &#8220;first of its kind&#8221; investment vehicle providing investment options on a range of currencies for up to 2% annual percentage yield when denominating in euros.



Lending products within crypto are hoping to fill the void left by low interest rate returns in traditional finance which have been pushed below or to near zero by centralized institutions aiming to buoy excessive inflation. As an alternative, crypto lending is seeking to lure investors in search of greater yields.



<blockquote class="wp-block-quote">&#8220;Corporate treasuries parked in cash or cash equivalents are getting a raw deal in most currencies,&#8221; Oliver Landsberg-Sadie told Blockworks in an interview on Thursday. &#8220;Crypto market dislocations between spot and futures continue to provide profit opportunities that only sophisticated traders are able to monetize.&#8221;</blockquote>



He said his company&#8217;s product offers a &#8220;market risk-neutral return&#8221; that draws upon arbitrage strategies executed by sophisticated traders in a way that also seeks to address counterparty credit risk that, while well established in traditional finance, was not widely understood or applied in crypto. 



&#8220;This is the only risk-neutral trade that can outperform true inflation in most currencies and is attracting great interest from those stuck in negative interest rate territory.&#8221;



Clients of the fund may choose to lend out in either fiat or crypto over a 30, 60 or 90 day period which are accompanied by corresponding notes resembling bonds, the company said. Returns can jump up to 8% when denominated in US dollars.



The investment vehicle provides multiple strategies for EUR, GBP, USD, CHF and crypto, according to the company&#8217;s <a href="https://www.bcbgroup.com/yield/" target="_blank" rel="noreferrer noopener">product page</a>. BCB said in its release its latest product marked the &#8220;first step&#8221; in a broader range of yield options that will be launching this year with a focus on solutions that leverage decentralized finance protocols and products.



<h3 class="wp-block-heading">Retail versus institutional lending in EU, North America</h3>



The launch of BCB&#8217;s lending product comes at a time when US regulators have been pushing for <a href="https://cms.blockworks.co/cftc-chair-asks-congress-for-greater-oversight-on-crypto-market/" target="_blank" rel="noreferrer noopener">greater oversight</a> of both crypto and accompanying lending products. 



Earlier this week, BlockFi paid $50 million to the Securities and Exchange Commission in addition to a further $50 million to state regulators over allegations it failed to register its <a href="https://cms.blockworks.co/crypto-lender-blockfi-to-pay-100m-in-fines-to-us-regulators/" target="_blank" rel="noreferrer noopener">high-interest securities</a> offered to retail clients.



Decisions over how to regulate crypto lending across the border in Canada fair marginally better as they fall under the purview of the country&#8217;s provinces, though the regulatory prerequisites for such products can only be achieved via <a href="https://cms.blockworks.co/is-a-regulatory-fight-over-crypto-lending-brewing-in-canada/" target="_blank" rel="noreferrer noopener">patience and time</a>, according to one local exchange.



But when it comes to the EU, BCB&#8217;s Chief Product Officer Chris Aruliah told Blockworks the company&#8217;s product differs significantly from BlockFi&#8217;s offering and uses a structure known as an Open-Ended Investment Scheme governed by Luxembourg securitization law.



<meta charset="utf-8">&#8220;This law governs how the fund operates and how the fund is structured,&#8221; said Aruliah. &#8220;Under the terms of the fund, the fund manager can use a number of agreed [legal] strategies to generate a return for investors.&#8221;



<blockquote class="wp-block-quote"><meta charset="utf-8">&#8220;The fund does not participate in the retail lending market like BlockFi&#8230;the nature of this product differs considerably to BlockFi and cannot really be compared,&#8221; he said.</blockquote>



The strategy utilized by BCB&#8217;s fund is based on allocations lent to &#8220;recognized&#8221; institutional firms within the crypto industry, Aruliah added.



Under the fund&#8217;s terms, investors and companies need to qualify for professional status and be able to post a minimum of 125,000 euros ($142,000), while passing necessary KYC and onboarding processes. The fund is only available to select European customers and is not available to US customers.



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BCB Group Launches Yield Product in EU Amid Regulatory Scrutiny in US

Liz Coyne

Blockworks&#8217; <a href="https://youtube.com/playlist?list=PLvER9nHSRN3wZX2tI3JrCLOAzMBgUJtBo" target="_blank" rel="noreferrer noopener">Forward Guidance</a> podcast host Jack Farley sat down with Chris Harmse, managing director of BVNK, at Blockworks&#8217; <a href="https://cms.blockworks.co/events/das-london/" target="_blank" rel="noreferrer noopener">Digital Asset Summit in London</a> to talk about generating yield in crypto and DeFi.



Harmse has a decade’s experience in analyzing and trading financial markets to identify investment and commercial opportunities across multiple asset classes for corporate and private clients. 



In that time, he has held trading, analyst and fund management roles with BNP Paribas, Centaur Asset Management, Excelsia Capital and Asymmetry Asset Management. Harmse began his career as an equity trader at Renaissance Capital, before joining the buy-side team of Rezco Asset Management, where he focused on preserving clients’ capital while creating wealth.



As an equity analyst Harmse has focused on deep analytical research, equity valuation, and financial modeling. His experience as a buy-side equity analyst highlighted how digital asset infrastructure can be applied to reduce the inefficiencies of traditional financial services and improve on incumbent business models.



Watch the full interview below.



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