Institutions want 'safe' yield from crypto, not DeFi risks
According to GlobalStake co-founder Thomas Chaffee, institutional investors have been showing increased interest in cryptocurrencies, particularly Bitcoin, lately. However, they are attracted not to traditional DeFi strategies or smart contracts, but to collateralized, market-neutral schemes.
Chaffee noted that institutions are not looking for increased risks, but want to get from cryptocurrencies the kind of yield comparable to traditional financial instruments. In other words, they are seeking 'safe' ways to earn in digital assets.
This approach differs from the general trend of recent years, when cryptocurrency projects, especially in the DeFi space, offered aggressive strategies with high returns but also increased risks. However, institutional investors who invest on behalf of their clients have to be more conservative.
According to the expert, this is what explains the growing interest of major players in market-neutral strategies with high collateralization. Such schemes allow to profit from the volatility of the cryptocurrency market, while minimizing risks.
Overall, the trend reflects the desire of institutional investors to adapt traditional finance approaches to the cryptocurrency market. They want to get familiar, 'reliable' yield without sacrificing security.