Crypto may not have crossed the threshold of full-blown mass adoption, but as Raoul Paul would say, it’s the fastest adopted technology in all recorded history igniting “the exponential age”. And our chance to front-run Wall Street.
In 2021 alone, global adoption rose dramatically.
Should this kind of exponential growth continue, then 2022 is going to blow 881% out the water.
Think institutions won’t play a starring role? Think again.
Institutional adoption isn’t just coming, it’s already happening.
- Crypto funds destroying the hedgies!
- DeFi is irresistible.
- Insatiable demand for Layer-1 technology.
Institutions go degen?
Money talks, and 2021 proved that crypto is the language of outsized returns.
As Frank Chapparo shared in a recent tweet:
That’s both a damning indictment of traditional hedge funds, and a powerful endorsement of those crypto funds operating further out on the risk curve. If outperforming the S&P 500 is the benchmark, TradFi outfits have little choice but to follow suit – not for any love of the tech, but out of sheer necessity. Either they change with the times, or risk getting left behind.
It’s already happening:
And exponentially at that!
For years, talk of institutional adoption has been centred almost exclusively around Bitcoin. Sure, Michael Saylor has gone all-in with Microstrategy, yet he remains a laser-eyed outlier.
The exponential innovation happening in the space means institutions will be eyeing emerging ecosystems (and financial instruments) to deliver the gains they’re after.
The unstoppable allure of DeFi
As Dan Tapiero put it, legacy cash cannot be made attractive. The yields on stables, however, are irresistible.
Still, he’s missing a trick here.
To say we’re already ahead of the curve would be the understatement of the year: The average degen with a basic grasp of Terra’s ecosystem could have easily outperformed most traditional hedge funds (by 9%!) simply by parking some stables into Anchor Protocol, with APR of around 19-20%!
Given the market cap of Terra’s algorithmically-backed UST is fast outperforming every other stablecoin at such an incredible rate, Luna is primed and ready to see some serious price action across the year. There’s little UST doubt it is fast-becoming the whales’ stablecoin of choice, both in terms of yield available, and the resilience of its peg to the US dollar. The more UST minted, the more Luna gets burned: a simple case of supply and demand!
Another token well placed to see a massive inflow of institutional adoption, is QRDO.
As institutions increasingly dip their toes into the magical waters of DeFi and digital assets, security protocols present a bit of a headache. After all, who is trustworthy enough to take custody of the private keys?
That’s where Qredo comes in; simply put, by distributing the private key in multiple pieces across different nodes in its ecosystem. When it’s time for an institution to put their holdings to work, Qredo pools together the different chunks of the private key in a decentralized way, thereby eliminating the potential risks of a single private key falling into the wrong hands. It’s a protocol that allows fund managers to sleep soundly at night, safe in the knowledge that no single rogue trader or custodian can embezzle their digital assets.
AAVE might not be as sexy as some of the newer DeFi protocols out there, but that won’t put off the big institutions. Not only is it one of the first and truly battle-tested projects in the space, it remains the number one multi-chain DeFi protocol out there with over $11 billion in total value locked (TVL).
Further, it’s making some major inroads in terms of institutional adoption, thanks to the recent launch of its first ever institution-centric product, Aave Arc, which will give access to an array of regulated DeFi services that is being shipped to over 30 institutions!
A Banter favourite!
We’ve established that DeFi’s high yields are a top prospect for institutional investors; yield farming is one of the most lucrative (but difficult and risky) ways of maximising gains.
That’s why Don-Key Finance could be well positioned to fly in the year ahead, thanks to its way of pairing skilled farmers with retail (or institutional?) money, not to mention the gamification factor: making DeFi fun, and not just because everyone enjoys watching their portfolio grow! Don-Key’s USP is to simplify yield farming for retail investors, but as the space matures, it makes sense that these kinds of protocols (and let’s be honest, nobody does it better!) would appeal to institutions looking to deploy capital – not least because yield farming can generate returns irrespective of market conditions!
Where Don-Key makes yield farming fun, Spool aims to make it seamless; a DeFi ’toolkit’ helping users to generate fully bespoke, diversified (and automated!) yield farming portfolios from a one-off deposit.
Thanks to its integration with an array of supported protocols, Spool helps users create a diversified portfolio suited to their particular needs. Best of all, it does the tricky bits for you, automatically rebalancing liquidity between yield-bearing protocols in accordance with your appetite for risk.
Spool’s automated compounding, rebalancing, and low gas fees (it uses transaction batching and a buffer system to mitigate against the worst of Ethereum) make it well placed to attract the kind of institutional money currently doing sweet nothing (except losing its purchasing power!). It might be a new protocol, but the support of the Spool DAO gives it the kind of credibility institutions are looking for in the wild west of DeFi: the DAO includes over 40 top-tier firms including Genesis Block Ventures, F2Pool, JRR Group, DFG, Faculty Group, DigiStrats, CMS, Barnbridge, and even the man himself, Uncle Ran!
We’ve discussed why we think Layer-1’s are the safest bet in crypto right now. The appetite for blockchain technology is insatiable!
With Ethereum well established among institutional investors (Grayscale’s Ethereum Trust is worth $10 billion!), newer, cheaper Layer-1’s present an opportunity to get in on the action at an earlier stage. Think, investing in Ethereum back when Kevin O’Leary still thought it was the ultimate ponzi!
As for which Layer-1 would be the best bet? That’s up for debate, and chances are you have your own personal favorites. Clearly, the smart money seems to be eyeing Solana. Greyscale launched their Solana Trust as recently as November 2021, and that’s a pretty good gauge of (anticipated) institutional demand.
Meanwhile, Bank of America just announced its belief that Solana could become the Visa of the’ crypto universe’ due to its lightning speed, cheap transactions, and hyper scalability. Translation “Bullish AF!”
If you’re reading this article, congrats – you’re a degen. And degens are way ahead of the game. Crypto is your opportunity to effectively front-run the smart money. When has that ever happened before for retail investors? If you’re relatively new to the space, you might think you’re not early anymore. And maybe you’re right. Point is, you’re early enough. You’re here before the rest of the world, and beating institutions to the punch. Playing your cards right by investing in protocols set to attract the heavy-hitters could make 2022 a truly unforgettable year!