[PRESS RELEASE – London, England, 15th September 2022]
Infinity Exchange, a decentralized financial protocol that provides institutional capital efficiency for traders, yield farmers and global fixed income investors, has closed a $4.2 million seed round, paving the way for the institutionalization of DeFi.
The round was led by top tier financial institutions including market makers and funds GSR, SIG, CMS, C-Squared and Flow Traders. The proceeds will be used to increase the number of employees and further develop Infinity’s product offering, including fixed and floating rate markets, as well as futures and spot trading markets, ultimately forming the first complete financial market protocol in DeFi.
Founded by ex-Morgan Stanley Head of Structuring, Kevin Lepsoe, the paper-less Infinity Exchange is the basic rate and risk management protocol that enables institutional investor participation in DeFi. Developed on Ethereum, Infinity’s hybrid protocol incorporates well-established mechanics from traditional financial markets and is capable of handling the trading of trillions of dollars of assets that will be tokenized in the new, institutionalized world of DeFi (“DeFi 2.0”).
“Crypto interest or lending protocols have been built in isolation and on economically weak foundations that do not align with the core principles of traditional finance. To gain institutional adoption, we need to completely rebuild these foundations, change the narrative and show market participants through our protocol that lending, interest and credit risk management must work together for a robust crypto-financial system to flourish, Lepsoe said.
Critical infrastructure for DeFi 2.0
Infinity Exchange debuts market-driven floating rates that are used for both lending and borrowing, to form the crypto industry’s benchmark rates. Along with fixed rates, Infinity pioneers the first full crypto yield curve where liquidity can flow smoothly across all maturities, and investors holding complex tokens have easy access to funding.
Fixed Income Markets Key for DeFi
Traditional fixed income markets are significantly larger than their equity counterparts, but in crypto markets it is the other way around with spot or token exchange markets that are 100 times larger than their lending counterparts. This highlights the novelty and inefficiency of lending protocols in today’s DeFi (“DeFi 1.0”) and market recognition that DeFi 1.0 has failed to price, deliver and integrate the time value of money for investors.
“Most lending protocols that exist today are designed to work around network architecture and virtual machine limitations, but not true shortfalls in the capital markets. Leverage-based lending is likely to become obsolete quickly, due to the difference between the true on-chain and off-chain capital costs , says C-Squared in a statement.
Groundbreaking interest rate arbitrage
Infinity Exchange enables borrowing and lending supported by a comprehensive risk management system that runs market-derived risk measures and protocol-based analytics, including value-at-risk. Beyond major cryptocurrencies, Infinity provides funding against “Complex Tokens”, including Aaves aTokens, Compounds cTokens, Uniswap V3 LP Tokens and Curve LP Tokens. Infinity Exchange has pioneered the ability for investors to deposit complex tokens, borrow against them and repeat the process facilitating large-scale interest rate arbitrage in DeFi for the first time.
“Building out a full yield curve with both floating and fixed rates will unlock new uses and pockets of liquidity for the crypto markets. Infinity’s success should effectively reduce volatility and add stability to the larger DeFi ecosystem. We believe Infinity has the right team to carry out this mission and look forward to supporting them as they move forward,” CMS Holdings said in a statement.
Infinity Exchange launched its testnet in September 2022 and is currently in pilot with selected institutional investors. They also want to provide a smart contract interface to their credit risk management system so that other protocols can offer much greater capital efficiency to their end users – a risk management as a service feature of the smart contract or Risk Management Protocol.
“A crypto yield curve will allow for a more robust range of products around stablecoins, ultimately helping to reduce crypto volatility and help pave the way for more traditional institutional investors. While most protocols offer either a fixed or floating rate product, Infinity tackles Exchange fixed rates, floating rates and security/risk management to build a fully integrated yield curve solution.Using past experience as both a second-time founder and as former Head of Structuring at Morgan Stanley, we saw in Kevin a founder well-suited to build a DeFi market that institutions can embrace,” Vir Anand, investor at SIG DT Investments, said in a statement.
About Infinity Exchange
Infinity Exchange is a hybrid interest rate protocol on Ethereum that builds the foundation for the next generation of DeFi. Developed by veteran traders, quants and financial engineers, Infinity combines theoretical finance with distributed ledger technology and enterprise-grade risk management to enable broad institutional investor adoption.
Binance Free $100 (Exclusive): Use this link to sign up and receive $100 free and 10% off Binance Futures first month (terms).
PrimeXBT Special Offer: Use this link to sign up and enter code POTATO50 to receive up to $7,000 on your deposits.