Today Nomura’s Laser Digital announced an investment of an undisclosed amount in DeFi startup Infinity Exchange which is working on a solution for institutional lending and borrowing.
The exchange has set a lofty goal of setting the cryptocurrency industry’s benchmark interest rates with its protocol due to launch on Ethereum in the second quarter of this year. It views its solution as DeFi 2.0 compared to the well known protocols such as Aave and Compound it considers as DeFi 1.0. It’s a hybrid solution that processes calculations off-chain but transactions on-chain.
“Infinity is building critical infrastructure for DeFi, and its protocol enabling price discovery and management of risk within DeFi is transformative for institutions,” said Olivier Dang, Head of Ventures at Laser Digital.
The funding follows a $4.2m seed round in September 2022 that included Susquehanna International Group, GSR, Flow Traders, CSquared, Block0, OWC, CMS, and others. “Building out a complete yield curve with both floating and fixed rates will unlock new use cases and pockets of liquidity for the crypto markets,” said CMS holdings at the time.
Infinity’s CEO is Kevin Lepsoe, who spent five years as Head of Structuring at Morgan Stanley Hong Kong until 2011.
The announcement references the recent Basel Committee rules for banks and crypto-assets, which come into effect in 2025 and assign a conventional risk weighting for tokenized financial and real world assets. However, the December announcement explicitly puts a question mark over permissionless blockchains, which the Committee wishes to assess further.
This is Laser Digital’s second DeFi investment after backing Orderly Network in November 2022. Nomura unveiled Swiss-based Laser Digital in September as its digital assets investment vehicle.
Fellow Japanese institution SBI Digital Asset Holdings is also eyeing DeFi and is participating alongside JP Morgan and Marketnode in DeFi experiments with the Monetary Authority of Singapore (MAS). MAS is also using DeFi for Forex in a cross border CBDC trial with the central banks of France and Switzerland.