Crypto asset manager and ETF provider Bitwise said it had made its first allocation into decentralized finance (DeFi) through a union with on-chain credit specialist Maple Finance. This association will provide Bitwise’s institutional clients access to compliant, onchain investment opportunities.
The collaboration demonstrates the increasing trend of institutional capital shifting from conventional fixed-income products to risk-profile-specific onchain lending options. Bitwise said in a statement:
This marks a pivotal step as institutional capital increasingly seeks structured, transparent and yield-generating opportunities within the digital asset space.
– Bitwise
Crypto lending evolves with transparency and risk management
The complex world of cryptocurrency lending has seen several bankruptcies, including those of centralized credit companies like Celsius and BlockFi. Theoretically, putting the activity onchain reduces the possibility of human bias during defaults and promotes transparency.
Maple founder Sid Powell noted that in 2022, the overall market leverage was much higher than it is today. He noted that the underlying concern was that it exacerbated contagion because people would borrow from each other and then lend to third parties, causing too much interconnectivity between different lending partners.
Maple offers over- and under-collateralized loans backed by digital assets and has generated relatively uniform, risk-adjusted yields since its launch in 2021. Last year, it released SYRUP, the protocol’s governance and staking asset, which allows holders to participate in governance and stake the asset to help secure the protocol and earn rewards.
Under Powell, the protocol primarily deals with over-collateralized loans, moving away from its original emphasis on under-collateralized lending. He stated that the over-collateralized lending sector was oversaturated when he entered the market in 2021. The protocol is now managing some $620 million in total value locked.
According to Powell, their differentiator is that they segregate the pools. For risk-averse lenders, there is an option to invest only in Bitcoin and ETH-backed loans. But those willing to risk a bit more for a higher reward can select a pool that provides loans collateralized by Solana or XRP.
Maple and Bitwise drive innovation in on-chain investment and asset management
At the beginning of the year, Maple established a “Lend + Long” structured yield product that buys Bitcoin call options using revenue from its high-yield lending pool. The product was marketed towards institutional investors, corporate treasuries and yield funds. In 2023, it launched a direct lending arm called Maple Direct.
Bitwise offers a range of index funds and actively managed investment products, including ETFs, separately managed accounts, private funds, and staking products. The firm says it has $12 billion in client assets and has thousands of financial advisers, family offices, and institutional investors among its clients.
Bitwise has been especially busy in recent months filing alternative crypto ETFs, including products that give exposure to APT and XRP tokens. With digital copies of real-world assets becoming an increasingly large part of traditional finance, firms are eyeing more than just tokenized Treasury Bills. This change occurred as interest rates fell, but DeFi yields recovered.
Powell said Bitwise was incredibly optimistic that the future of asset management lies on-chain, where products can be more transparent, and firms can access opportunities that don’t exist in traditional finance.
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