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- ETH loans increased by 400% from $465 million in Q4 2020 to $2.4 billion in Q1.
- Traders are institutions that are now taking decentralized finance (DeFi) seriously.
- Genesis highlighted the most significant drivers of growth as trades.
At Genesis, which Digital Currency Group owns, ETH loans have increased 400% from $465 million in Q4 2020 to $2.4 billion in Q1. As such, ETH now makes up 27% of the lender’s loan book, whereas it was just 15.5% of the loan book in Q4.
Momin Ahmad, chief strategy officer at Credmark, said it shows just how much institutions are taking decentralized finance (DeFi) seriously. He said it was kind of hard in DeFi to figure out who’s doing what.
Genesis – a DeFi gateway
Decentralized finance is a fast-growing sector of the cryptocurrency industry. It creates DeFi instruments separate from traditional centralized institutions.
Matt Ballensweig, Genesis vice president of lending, said a small percentage of their overall loan portfolio was financing the GBTC premium arb. He shared that the trades they did finance were with some of their best and largest counterparties who posted collateral either in the form of cash, crypto, private placement shares, or a mix of these.
In an official statement, Genesis said US dollars and stablecoins maintained a 21% share of the loan book because demand for cash has been relentless. It described a cash deficit issue as a reason for crypto-backed cash loan demand. Ballensweig said Genesis is actively looking to partner with banks such as Silvergate, Signature, and investment banks to bring more cash to traders in the crypto market as yield opportunities on USD remain very attractive relative to other credit opportunities.
Higher frequencies of trade as a growth driver
Genesis said their most significant drivers of growth were higher frequencies of trades and increased notional per trade from their crypto-native hedge fund client base.
The company said clients were early adopters of the platform and were well-positioned to take advantage of the over-the-counter liquidity they provided to take short-term, tactical bets in option format.
Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.
