Nomura's digital assets subsidiary, Laser Digital, has invested in Infinity, a decentralized finance (DeFi) protocol for institutional lending and borrowing.
Founded by ex-Morgan Stanley head of structuring Kevin Lepsoe, Infinity offers an interest rate protocol that forms the basis for benchmark rates and institutional-grade lending, borrowing, and risk management in DeFi. Infinity’s wholesale exchange provides inter-exchange clearing, fixed and floating rate markets, as well as enterprise-grade risk management utilising hybrid on-chain/off-chain infrastructures.
The investment by Nomura’s Laser Digital marks a concerted advance by traditional investment banks into the institutional DeFi or 'Hybrid Finance' space.
“Infinity is building critical infrastructure for DeFi, and its protocol enabling price discovery and management of risk within DeFi is transformative for institutions,” comments Olivier Dang, head of ventures at Laser Digital. “Infinity’s groundwork paves the way for institutional flows on-chain, new levels of rates and risk innovation, and we are keen to support their advances in the hybrid finance space.”
Hybrid Finance is a new term coined to describe the combination of decentralised and centralised finance, tapping the scalability of on-chain transactions by using off-chain risk management and computing. This enables practitioners to access blockchain efficiencies while still retaining enterprise-grade risk management.
Infinity founder Lepsoe says: “DeFi 1.0 has been revolutionary from a proof-of-concept standpoint; however, interestm rates, credit, and counterparty risk simply don’t exist in DeFi. Neither does a proper yield curve. Infinity addresses these foundation gaps and supports institutional adoption through basic wholesale infrastructure and a mathematically complete financial markets protocol that enables interoperability between protocols and the formation of benchmark rates; dynamic open-source product and market innovation; permissioned TradFi - DeFi fungibility; and leading-edge risk, collateral, and counterparty management.”
Nomura's backing follows a $4.2 million seed round in Infinity funded by CMS, GSR and Susquehanna among others. Terms of Nomura's investment were not disclosed.