Crypto funding seen shifting from CeFi to DeFi after major collapses: CoinGecko

March 6, 2023 Coin Telegraph

"NFTfi,” on-chain derivative platforms, decentralized stablecoins and Ethereum L2s are four investment opportunities being looked at closely by one crypto investment firm.

Digital asset investment firms poured $2.7 billion into decentralized finance projects in 2022, up 190% from 2021, while investments into centralized finance projects went the other way — falling 73% to $4.3 billion over the same timeframe.

The staggering rise in DeFi funding was despite overall crypto funding figures falling from $31.92 billion in 2021 to $18.25 billion in 2022 as the market shifted from bull to bear.

According to a March 1 report from CoinGecko, citing data from DefiLlama, the figures “potentially points to DeFi as the new high growth area for the crypto industry.” The report says that the decrease in funding toward CeFi could point to the sector “reaching a degree of saturation.”

*Funding amount by sector in the cryptocurrency market between 2018-2022. Source:* *CoinGecko*

The near three-fold increase in DeFi investment is also a staggering 65-fold increase from 2020, at the start of the last bull run.

According to CoinGecko, the largest DeFi funding in 2022 came from Luna Foundation Guard’s (LFG) $1 billion sale of LUNA tokens in February 2022, which came about three months before the catastrophic collapse of Terra Luna Classic (LUNC) and TerraClassicUSD (USTC) in May.

Ethereum-native decentralized exchange (DEX) Uniswap and Ethereum staking protocol Lido Finance raised $164 million and $94 million, respectively.

Meanwhile, FTX and FTX US were the largest recipients of CeFi funding, having raised $800 million in January — accounting for 18.6% of CeFi funding in 2022 alone. The crypto exchanges, however, collapsed only 10 months later and filed for bankruptcy.

Other areas of investments included blockchain infrastructure and blockchain technology companies, which raised $2.8 billion and $2.7 billion, respectively, a trend that has remained strong over the last five years, said CoinGecko.

Henrik Andersson, the chief investment officer of Australia-based asset fund manager Apollo Crypto, says his firm is looking at four specific sectors within crypto as of late:

The first is “NFTfi,” which he said results from the combination of DeFi and NFTs. These are NFT projects that use DeFi to implement various trading strategies to earn passive income, or long or short-trade NFT projects, among other things.

I haven't bought any NFTFI token

Just waiting for @nftperp to launch a token.

Anything perp derivatives outperforms other categories

Wen launch pic.twitter.com/yaW6HNkIGN
— DeFI Saint (@TheDeFISaint) February 17, 2023

The second and third are on-chain derivative platforms and decentralized stablecoins, which Andersson believes have come about due to the collapse of FTX and recent regulatory action:

“In the light of the FTX debacle and regulatory movements, we have seen renewed interest for on-chain derivatives platforms, such as GMX, SNX and LYRA. All seeing record volume/TVL.Decentralised stablecoins such as LUSD/LQTY has also gained from the current regulatory environment.”

After @LiquityProtocol listed on Binance, combined with the recent crackdown by the SEC against Centralized Stablecoins has put some spotlight on this narrative.

Let's check it out of TOP 15 Decentralized Stablecoins pic.twitter.com/XWJvWpaT4l
— HC - Capital (@hc_capital) March 5, 2023

The fourth vertical Andersson cited was Ethereum-based layer-2 networks. “2023 is set to be the year for L2s, and in particular Ethereum L2s,” he said.

The chief investment officer explained that layer-2 tokens such as Optimism (OP) have performed well of late, particularly in light of the testnet launch of “Base,” which was created by Coinbase and is powered by Optimism.

GMX, SNX, LYRA, LQTY and OP are all investments of Apollo Crypto.

Last month, cryptocurrency analyst Miles Deutscher predicted in a Feb. 19 tweet to his 301,700 followers that zero-knowledge rollup tokens, liquid staking derivative tokens, artificial intelligence (AI) tokens, perpetual DEX tokens, “real yield” tokens, GambleFi tokens, decentralized stablecoins and Chinese coins would perform well in 2023 on the back of heavy funding:

To make the biggest gains in crypto, you need to position yourself in the strongest narratives.

Some of the trends outlined in this thread still have potential to generate 50x opportunities.

: 8 crypto narratives I'm eyeing right now.
— Miles Deutscher (@milesdeutscher) February 18, 2023

Venture capital funding in the crypto space has, however, fallen over the last three consecutive quarters, amid tough market conditions.

‘Green ETH’ narrative to drive investment and adoption, says pundits

September 16, 2022 Coin Telegraph

Coin Telegraph

Post-Merge Ethereum has now detached itself from the “crypto mining is bad for the environment” narrative, following its transition to proof-of-stake.

The shedding of Ethereum’s energy-intensive proof-of-work (PoW) system is expected to see Ether (ETH) “flow into the institutional world,” according to a number of fund managers and co-founders.

On Sept. 15, Ethereum officially transitioned to a proof-of-stake (PoS) consensus mechanism, which is expected to cut energy consumption used by the network by 99.95%, according to the Ethereum Foundation.

The upgrade effectively ended the need for the Ethereum network to rely on miners and energy-guzzling mining hardware to validate transactions and build new blocks, as these functions are now replaced by validators who “stake” their ETH.

"The merge will reduce worldwide electricity consumption by 0.2%" - @drakefjustin
— vitalik.eth (@VitalikButerin) September 15, 2022

In a statement to Cointelegraph, Charlie Karaboga, CEO and co-founder of Australian fintech company Block Earner said the network’s transition to PoS would “drive the future of money to be more internet-based.”

He said that Ethereum would become “the settlement layer that everyone will accept and trust — especially when the spotlight is shining brighter than ever on the issue of sustainability in crypto mining.”

Markus Thielen, Chief Investment Officer of digital asset manager IDEG said that he had been in discussions with sovereign wealth funds and central banks to help build their digital asset portfolios, but direct investment had often been “voted down due to energy concerns.”

But now that the Ethereum network has transitioned to PoS, this issue is much less of a concern, he said:

“While demand has been strong, the missing link has been an underlying zero-emissions, financial infrastructure. With Ethereum moving to PoS, this clearly solves this last pillar of concern.”

Henrik Andersson of Apollo Capital told Cointelegraph that ESG had become a “big factor” behind institutional investment decision making in the last few years.

Andersson said he believes the 99.95% energy consumption cut on Ethereum would dramatically improve ETH’s ESG score, which in turn would “make it more appealing for institutional investors” over the long-term.

Blockworks co-founder Jason Yanowitz told his 92,900 followers on Sept. 15 that “Green ETH” will be the “best narrative” in crypto’s history, with crypto mining and PoW long plaguing the industry.

Yanowitz noted that until now, the “Bitcoin is bad for the environment” narrative has been “so impactful,” adding it spread like wildfire” and “has probably had the most negative impact on the asset's performance.”

“Most large institutions now have ESG mandates,” said Yanowitz.

“Fidelity, BlackRock, Goldman, etc... whether or not they like it, they now have to consider the environmental impacts of their portfolios.”

But that is now old news for Ethereum, with Yanowitz adding that the most important takeaway from the Merge is that “Ethereum becomes green” which becomes highly appealing to large corporations who have ESG mandates to comply with:

“This will be the best narrative crypto and ETH has ever seen. It will flow into the institutional world, where investors will buy ETH because it satisfies their ESG mandate.”

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

September 14, 2022 Coin Telegraph

Apollo Capital

Apollo Capital CIO Henrik Andersson said there will come a point when not investing in crypto will be a “career risk.”

Henrik Andersson, CIO of crypto asset fund manager Apollo Capital believes institutions may soon “flip” on their conservative stance towards crypto.

Speaking to Cointelegraph, the Melbourne-based crypto fund manager said that while institutional interest in crypto has been slow in picking up, particularly in Australia, there are a lot of players that are waiting for the right moment to strike.

Andersson admitted that major institutional investors in Australia, particularly retirement funds (or superannuation funds) have yet to warm up to the digital asset space.

“It’s still early days. So yes, speaking to a lot of family offices in Australia and smaller boutique institutions. The big industry super funds are not there yet.”

“From their point of view its still a lot of education going on. So it will still take some time, I believe,” he added.

Apollo Capital is a fund manager focused on providing family office and institutional investors access to crypto investment opportunities. One of its latest launched funds is the Apollo Capital Frontier Fund, which is focused on nonfungible token (NFT) infrastructure, decentralized finance (DeFi) and multi-chain infrastructure.

Asked what needs to happen for institutional sentiment to change, Andersson believes this will “flip” when big players start making more substantial moves in the space.

“No one wants to be the first into something like this. Because if you’re the first one and things go wrong, then there’s a career risk. That will flip at some point to the opposite,” explained Andersson.

“At some point, when prices go up, then people don’t want to miss out. And if others are making investments, then it will become a career risk not to be invested.”

In Australia, several large banking institutions such as ANZ, NAB and Commonwealth Bank (CBA) have already been making forays into the digital asset space.

“We’ve seen several of the major banks here in Australia, taking an interest in digital assets. So that’s really, really good to see,” he said.

CBA was notably the first major bank in the country to announce crypto services through its mobile banking app last year, but later put its plans on hold noting it was still waiting on regulatory clarity from the new government.

Others have pushed forward with stablecoin and tokenized asset trading.

Internationally, large banking conglomerates such as Singapore’s DBS Bank are continuing to grow its digital assets business despite the bear market, while major investment banks such as Goldman Sachs, Morgan Stanley, CitiGroup and JPMorgan have also been beefing up its coverage of the crypto space.

“You have all the major investment banks in the world writing research reports on the crypto space. Everyone from Goldman Sachs to Morgan Stanley, Citigroup, JP Morgan and others. So there’s definitely still a lot of interest in the space from those kind of institutional players.”

“So while it seems like its going very slowly now, you know, once the sentiment changes, we see the first players making investments that can change very, very quickly.”

Earlier this week, Irfan Ahmad, the Asia Pacific digital lead for the bank’s crypto unit State Street Digital told Sydney Morning Herald that despite the current crypto winter, institutional investors have maintained their interest in blockchain and digital assets.

DHedge scales up on Polygon, integrates with SushiSwap

August 2, 2021 Coin Telegraph

Coin Telegraph

dHEDGE’s “v2” Polygon deployment boasts a SushiSwap integration enabling asset managers to access Sushi’s DEX and yield farming functionality.

Decentralized asset management protocol, dHEDGE, has launched its V2 deployment on Polygon. The new platform also boasts an integration with popular decentralized exchange, SushiSwap.

Speaking exclusively to Cointelegraph, dHEDGE’s Henrik Andersson highlighted v2’s new Guarded Open Access Transactions (GOAT) framework — which enables v2 users to access whitelisted DeFi DApps whitelisted by the dHEDGE decentralized autonomous organization (DAO).

Andersson emphasized that the GOAT framework will significantly increase the speed with which dHEDGE is able to launch new integrations with third-party protocols, stating:

“It's like a general framework for us to add support for DApps. Instead of having to build specific plugins or connections to DApps, we can use this framework to whitelist DApps.”

Launched in late 2020, dHEDGE’s first iteration exclusively allowed fund managers to speculate on assets provided by the Synthetix protocol. By contrast, v2’s GOAT framework allows fund managers to access the assets and services of any Ethereum Virtual Machine (EVM)-based protocol approved by the dHEDGE DAO, enabling asset managers to provide yield farming services for investors.

At launch, dHEDGE v2 will enable support for SushiSwap’s Polygon-based decentralized exchange and yield farms. The dHEDGE DAO is currently exploring other popular DeFi protocols for potential support.

Andersson noted dHEDGE’s DAO is currently looking into integrating with Aave, noting the decentralized money market would enable asset managers to borrow a wide variety of assets for shorting. He added that dHEDGE plans to launch its v2 platform on additional EVM-compatible chains, noting Eth2, Optimism, and Arbitrum as likely contenders.

Despite the expanded functionality, Andersson describes gas fee mitigation as the primary motivation behind dHEDGE v2, noting the steep fees associated with trading through the protocol on Ethereum’s layer-one.

Henrik Andersson

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