Partnership will focus on expanding access to on-chain credit products and lower the cost of capital for traditional financial institutions.
SAN FRANCISCO, CA / ACCESSWIRE / December 15, 2022 / Archblock and Adapt3r have announced a strategic partnership that will work to onboard a new cohort of institutional, regulated participants to DeFi, starting with US-based community banks.
On-chain financing of "Real World Assets" has yet to expand to regulated originators, and to date has focused on more emerging and less established originators. As a first step in their joint roadmap, the partnership intends to enable US-based community banks to access DeFi financing. Archblock and Adapt3r believe they have found a scalable and mutually beneficial touchpoint between DeFi and regulated financial institutions that is extensible to other regulated institutions.
Earning sustainable risk-adjusted yields from quality underlying assets has become a major pain point for the DeFi ecosystem, highlighted by the recent volatility among both centralized and decentralized crypto lenders. This has prompted DeFi's largest participants to hunt for conservative fixed income instruments, despite the price premium. As a result, regulated originators could lower their cost of funding by sourcing liquidity on-chain, where more traditional products are scarce and demand is continuing to rise.
The partnership was born out of the teams' mutual goal of creating a frictionless on-ramp to DeFi for traditional banking system [and financial asset originator] participants. Archblock is composed of a core contributing team behind DeFi credit protocol TrueFi, whose infrastructure helps bridge the gap between traditional finance and DeFi. Adapt3r, an affiliate of digital asset hedge fund MJL Capital, has unique interdisciplinary expertise across digital asset and community bank investing.
Together, Archblock and Adapt3r will focus on providing on-chain access to low risk, traditional credit products for corporate treasuries, DAOs, and other institutional investors holding stablecoins. This will enable KYC'd users to hold Lending Pool (LP) tokens rather than simply signing off-chain agreements, allowing all community members to monitor the portfolio position in real-time.
As more sophisticated products are offered, Adapt3r will work directly with Archblock to build out custom vault architecture, reducing friction in onboarding new banks and portfolio diversification. Eventually, the teams aim to integrate Proof of Reserve oracle feeds, which will also bring stakeholders closer than ever to bank operating systems, enabling them to receive asset-level data in real-time.
Marcus Leanos, co-founder and Chief Executive Officer of Adapt3r commented "While DeFi has the potential to generate more immediate traction with underserved individuals and businesses, it will also face challenges with adverse selection, where unqualified borrowers are able to take advantage of the system. To address this issue and continue growing, DeFi needs to onboard high-quality, established assets and originators. Only by gaining traction in both high-risk and low-risk areas can DeFi make a significant impact on the global economy."
Bill Wolf, Archblock's Chief Investment Officer, added "Archblock aims to grow into the most efficient marketplace for the widest possible selection of financial opportunities, and our new relationship with Adapt3r opens a whole new class of assets to DeFi liquidity, attracting an even broader group of global lenders. We're excited about our mutual deep technical and financial experience, and we think there's no limit to the type and range of financial assets that can be efficiently structured and financed on-chain using the technology we are building together."
Archblock bridges institutional capital to DeFi's modern financial infrastructure. As a core TrueFi contributor, Archblock brings institutional investors and fund managers on-chain to make global lending more transparent, effective, and accessible. Archblock incubated DeFi's first credit protocol, TrueFi, now with nearly $2 billion in originations, as well as a suite of popular stablecoins, including TrueUSD, which today moves billions of dollars globally every month.
Adapt3r Digital LLC ("Adapt3r") is an affiliate of MJL Capital, an alternative asset manager headquartered in Washington, D.C. Its team has deep expertise investing in community bank private equity, bank-collateralized structured credit, and digital assets. Adapt3r strives to provide the on-chain community a simple access point to traditional credit products in a transparent and auditable manner.