Infinity Exchange Closes a $4.2M Seed Round to Build DeFi 2.0 – crypto.news

Infinity Exchange has just closed a $4.2 million seed round, paving the way for the institutionalization of DeFi. The platform is a decentralized finance protocol that provides institutional grade capital efficiency for traders, yield farmers, and global fixed income investors, 

Accelerating Institutional DeFi 2.0

Infinity exchange closed a seed funding round led by prominent financial institutions, including market makers and funds GSR, SIG, CMS, C-Squared, and Flow Traders. Notably, the funds will be used to expand the company’s operations and develop its product offerings, including fixed and floating rate markets and futures and spot trading markets. The platform will eventually form the first complete financial markets protocol in DeFi. 

The core of Infinity Exchange is its risk management and interest rate protocol, which was created by Kevin Lepsoe, a former Morgan Stanley executive. It is designed to allow institutional investors to participate in developing DeFi 2.0, an in-house blockchain. The platform utilizes a hybrid approach that combines the mechanics of traditional financial markets with the features of DeFi 2.0, allowing investors to trade trillions of dollars of assets.

Lepsoe said:

“Crypto interest rates or Lending Protocols have been built in isolation and on economically weak foundations that do not align with the core tenets 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 Rates, and Credit Risk Management must work in concert for a robust crypto financial system to flourish.”

The market-driven interest rates that Infinity Exchange provides are the industry’s benchmark for the multiple types of loans and borrowing in the crypto industry. They are also the first to establish a full yield curve, which allows investors to access a wider range of financing options.

Pioneering the Switch from DeFi 1.0’s Inefficiency 

While fixed income markets are more than twice as large as their equity counterparts, in crypto markets, the difference is that spot, or token swap trading is more than a hundred times greater than lending. It highlights the inefficiency and lack of liquidity in the current DeFi 1.0 protocols. It also highlights the need for investors to fully integrate the time value of their money into the market.

“Most lending protocols today are designed to bypass limitations in network architecture and virtual machine constraints, but not true deficits in capital markets. Utilization-based lending will likely become antiquated quickly, owing to the disparity between the true on-chain and off-chain cost of capital,” said C-Squared, in a statement.

Through its risk management system, Infinity Exchange enables lending and borrowing across various cryptocurrencies and complex tokens. It also provides financing against multiple complex assets, such as Aave’s a token, Compound’s c token, Uniswap V3 LP token, and Curve’s LP token. Its unique ability to deposit and borrow against complex tokens has pioneered the development of a process that allows investors to participate in large-scale interest rate arbitrage.

Its unique ability to deposit and borrow against complex assets has also pioneered the development of a process that allows investors to participate in large-scale interest rate arbitrage.

Notably, in September 2022, Infinity Exchange launched its testnet. It is currently in its pilot phase with a select group of investors. It is also developing a smart contract interface that will allow its end users to manage their credit risk. That could allow them to reduce their risk management fees and improve their capital efficiency.