Fixed interest rates to create a DeFi 2.0 for institutions, says former bank exec

Infinity Exchange, a new platform providing institutional grade capital efficiency in decentralized finance (DeFi), announced a $4.2 million seed round in a bid to boost institutional adoption for DeFi.

Infinity Exchange is led by ex-Morgan Stanley executive Kevin Lepsoe, who left the world of traditional finance with sights set on the possibilities provided for investors through DeFi.

However, the founder says that institutional investment is critical for providing strong economic foundations for the next iteration of DeFi 2.0.

According to Lepsoe, with access to a full rates product suite, with fixed-to-floating rates, there will be more secure opportunities for institutional investors and equality in rates for individuals.

“The beauty is now individual investors will have comfort knowing they have access to the same markets that institutional investors do, and it doesn’t matter if they’re lending or borrowing $100 or $10 million.”

Lepsoe highlights thaa major downfall of the current DeFi 1.0 space is the disconnect between floating rates markets and fixed-rate markets. In such instances, like the current DeFi setup, capital can’t easily flow, causing markets to not work in union with one another. 

Funds obtained from the latest round will go towards Infinity’s development of product offerings, including fixed and floating rate markets, along with futures and spot trading markets, among other things.

In providing elements of TradFi, such as complete financial markets protocol with fixed and floating interest rates, it encourages large institutions to step into the unfamiliar. Lepsoe told Cointelegraph that this also helps compensate for the current shortcomings of current DeFi protocols, like those mentioned above.

“By integrating the product features, and introducing more efficient collateral management, we enable more players to access the markets and trade it in many new ways not previously possible.”

Lepsoe estimates that such tools for large-scale investors are a major part of the foundation of potential market growth of up to “1000 times what it is today."

This development comes as institutional investors eye the space. Some surveys show around eight percent of institutional investors believe crypto will surpass traditional investments in the next ten years.