Despite the bloodbath in the DeFi market, institutional adoption is progressing

Many DeFi projects are in free fall. Both Uniswap (UNI), PancakeSwap(CAKE), SushiSwap (SUSHI) and the prices of the lending protocols Aave (AAVE) and Compound (COMP) have collapsed in the last few days. Only the tokens of the two DeFi exchanges for derivatives trading, dYdX (DYDX) and Perpetual Protocol (PERP), were able to withstand the strong correction. This is probably because the trading volume is up both exchanges is rising sharply, when crypto market volatility increases. Since traders can bet on both falling and rising prices on dYdX and Perpetual Protocol, the two decentralized exchanges benefit from price rises as well as price falls.

Total Value Locked in descent

The Total Value Locked (TVL) in the DeFi area behaves completely differently during a market correction. Due to the fact that a large part of the TVL in DeFi consists of cryptocurrencies such as ETH or BTC, it can lose a lot of value in a market correction. This market correction has also shown that the capital in DeFi can be greatly reduced in the event of corrections. On Friday alone, the TVL in DeFi lost around 20 percent of its value.

At press time, the TVL is at $250.52 billion – the lowest level since December 14, 2021.

OpenSea buys DeFi wallet providers

The largest provider for trading non-fungible tokens (NFTs), Opensea, announced on Jan. 18 that it had acquired DeFi wallet provider Dharma Labs. Dharma Labs has been acquired for an undisclosed sum and is said to be expanding its product range from OpenSea expand in the coming months. In a opinion said Devin Finzer, CEO of OpenSea, that Dharma Labs aims to catapult NFTs into the mainstream. More specifically, it aims to improve the experience of buying, minting and selling NFTs on OpenSea and add DeFi capabilities. For users, this means that it will probably soon be possible to buy NFTs directly with fiat money on OpenSea.

DeFi access for institutional investors

In a governance vote, AAVE token holders have voted to launch the institutional-grade Aave Arc project on both ETH scaling solution Arbitrum and Optimism. Together with Fireblocks, the DeFi project wants to offer institutional investors their own and regulated access to the DeFi world, according to Stani Kulekhov, Founder and CEO of Aave.

Aave Arc allows institutions to use Aave like any other user would. The only difference is that they can do this in a separate environment that ensures strict KYC and AMLY standards

In this way, Aave Arc enables institutions to take advantage of almost all the benefits of DeFi while still meeting their compliance requirements. So far, this is still a rarity in DeFi. Institutions looking to use Aave Arc include Anubi Digital, Bluefire Capital, Canvas Digital, Celsius, CoinShares, GSR, Hidden Road, Ribbit Capital, Covario, QCP Capital, and Wintermute.