London-based digital asset infrastructure provider Copper.co (Copper) has launched the first dedicated decentralised finance (DeFi) tool for crypto institutions.
CopperConnect provides institutional investors such as crypto funds, with a highly secure way to connect digital assets stored in Copper’s multi-party computation (MPC) wallets with decentralised applications (dApps).
This allows investors to lock their assets into DeFi ‘smart contracts’ and tap into the liquidity currently locked in DeFi, valued at more than $14 billion.
When an institution deposits crypto assets into a DeFi pool, they are effectively contributing to a decentralised pool of assets that can be borrowed from at interest by individuals or businesses.
This means that institutions that deposit funds into a DeFi pool are able to earn passive income from their assets.
In the past, the DeFi space was viewed as too volatile for many crypto funds. However, over recent months, the number of unaudited DeFi projects, where smart contracts have not been security checked by third-party experts, has decreased with fluctuations in the value of DeFi markets becoming less dramatic.
As a result, Copper believes the level of risk is now more manageable for institutions.
This has led to high demand from institutional crypto investors for secure ways to gain exposure to the DeFi marketplace – which the platform hopes that CopperConnect satisfies.
Outlining the importance of the new product, Katrina Daminova, head of product at Copper, explained: “Over the past three months, there has been a lot of excitement about the potential of DeFi for crypto institutions. The prospect of being able to earn interest on assets that would otherwise just be sitting in a secure wallet is a potential game-changer for any crypto-fund. However, up until very recently, the lack of security auditing coupled with radical value drops on major DeFi projects have driven up the risk and deterred institutions from investing.”
She continued: “But the tide has rapidly turned – only last month, DeFi audit firms reported an overwhelming demand from DeFi companies to get their projects audited. This push for credibility has come with a notable stabilisation across the sector, and finally institutions are looking at DeFi as a legitimate channel to earn revenue, especially when many other financial markets are more volatile or weaker than normal. Up until today, there was only one real remaining barrier to entry for firms – being able to transfer their assets into dApps securely and efficiently.”
Ms Daminova concluded: “I am very excited to say that we have overcome this barrier with CopperConnect. We have taken our industry-leading security, which forms the foundation of Copper’s platform, and applied it smart contracts, allowing our clients to participate in this exciting new space.”
