Three DeFi Instruments Financial Firms Have Their Eyes On Despite Crypto Winter

Written by Anton Chachin, Managing Partner at Bitfrost

Anton Chachin

In the midst of the crypto winter, with $2.25 trillion loss Across the market in the past few months alone, many institutional investors have started taking profits in an effort to hold at least a portion of their assets, while others are going down so as not to lose more in the market’s fall.

However, regardless of the economic downturn, applications of blockchain technology continue to evolve. One such area is DeFi (Decentralized Finance), a term given to reimagining financial services to become peer-to-peer and powered by blockchain. The total value of assets held in DeFi transactions grew from $601 million at the start of 2020 to $166 billion in 2022, according to blockchain data provider Amberdata.

However, unlike what we’ve seen before, this rally wasn’t primarily driven by retail investors, but was instead led by institutional investors who have recently joined or consolidated their presence in DeFi as they realize that digital assets will stay with us for a long time to come. With this trend continuing throughout the crisis, there are a few tools that are particularly noteworthy.

1. Metaverse

Virtual reality, mixed reality, augmented reality, and other similar technologies have been around for a long time, but Decentraland and other companies in the crypto ecosystem are now fundamentally changing the way we think about the metaverse. Prophecy Market Insights predicts that the global metaverse market will be $337.23 million in 2020, and is expected to reach $1,003.06 million by 2030, at a compound annual growth rate of 11.50% in the meantime.

After popularizing the metaverse across a range of media platforms, institutional investors are now beginning to enter the market, which has huge growth potential thanks to the decentralized crypto infrastructure that underpins it. Venture capital firm Andreessen Horowitz (a16z), for example, Recently launched A $600 million fund focused on metaverse games.

2. NFTs

Non-fungible tokens (NFTs) represent new frontiers in promising investment opportunities for investors, asset managers and creators through the commodification of previously non-tradable assets. A group of Finder’s Experts I predicted recently The market capitalization of NFT will reach $26 billion by the end of 2022, and increase to $146 billion by 2025.

Although the current narrative around NFTs often focuses squarely on art and collectibles, the rapid entry into space of legacy institutions such as Christie’s and Sotheby’s has further revitalized the market, giving it credibility as an asset class and inspiring confidence among both individual and institutional investors that previously Watched with intrigue from the sidelines.

For example, a number of prominent cryptocurrencies in Silicon Valley Recently Supported New start-up NFT fund led by Andrew Jiang and Todd Goldberg. The $30 million fund – Curated – is for the purchase and holding of NFT artworks, including popular “NFTs” such as CryptoPunks, Art Blocks and Bored Apes, as well as individual NFT works by famous artists.

Far from a buzzword or trend, the expanded and decentralized ecosystem of NFTs has the potential to hold tremendous value for the institutional investment industry. And while the full scope of the token’s usefulness is still in its infancy, the adoption of NFT is likely to impact all aspects of our economy in the coming years.

3. Cryptocurrency wallets

With the development of Web 3 ecosystems, along with increased institutional interest, the issue of digital user identification is increasingly being raised among DeFi developers.

Far-sighted institutional investors are already paying attention to promising projects related to crypto wallets, which will become key to the presence in the metaverse, used as a gateway to games, to help build pools of non-fungible tokens (NFTs), and enable commercial transactions. Cryptocurrency wallets will operate independently of cryptocurrency exchanges and will be connected to everything that users and businesses are already doing online.

Time to stay alert

Given the recent volatility in digital assets, it is natural to be skeptical about future opportunities in the DeFi space. But it would be irresponsible to ignore its inherent value.

With the intensification of digital currency regulatory work and the very real possibility of a long crypto winter, every institutional investor should at least maintain an observer position. The most active institutional crypto advocates will benefit from a strong start once the frost finally begins to thaw.

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