TradFi leaders are increasingly cozying up to DeFi.
Case in point: Jane Street, a Wall Street quantitative trading firm with more than $300B in assets, has taken out a 25M USDC loan from BlockTower Capital. The loan, worth $25M, was facilitated by the decentralized funding platform Clearpool, it said on May 3.
Whitelisted
Clearpool enables institutions to borrow uncollateralized loans via a network of lenders, and is backed by venture capital firms, including Arrington Capital and Sequoia Capital.
The deal marks the latest round of DeFi-TradFi hookups. Leading crypto money market Aave launched its institutional platform Arc earlier this year, deploying on L2s Arbitrum and Optimism to offer low fees. On January, 30 institutions joined Aave Arc.
Clearpool launched its permissionless pools product in March, allowing whitelisted institutional borrowers to compete for stablecoins loans from its network of lenders. The BlockTower and Jane Street pool is the first permissioned product offered by the platform.
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While Jane Street has not confirmed how it will deploy the borrowed stablecoins, the firm may seek to generate yield in the DeFi markets. Jane Street may look to up its loan to 50M USDC in the “near future,” according to Clearpool.
The move is not Jane Street’s first foray into crypto. Last month, it backed the $9M funding round of Near-based decentralized money market Bastion. The firm also acts as a marketmaker for Robinhood’s crypto markets, and made its first cryptocurrency trades back in 2017.
Exploring DeFi
Sam Bankman-Fried, the CEO of centralized digital asset exchange FTX, previously worked at Jane Street, quitting the company just two months before founding the quantitative trading firm, Alameda Research, in 2017.
Traditional financial institutions are increasingly exploring DeFi through under and uncollateralized lending protocols.
In March, a governance proposal for MakerDAO, the protocol behind the decentralized DAI stablecoin, called for financing loans backed by real-world assets and joining forces with undercollateralized lending protocols to broaden its exposure beyond the crypto markets.
Undercollateralized lending protocol Maple and uncollateralized loan platform TrueFi quickly answered the call, pitching the creation of large DAI pools designated to fund institutional loans facilitated by their respective platforms. Both firms have enabled the funding of more than $1B worth of loans, with Maple launching one year ago and TrueFi going live in November 2020.