Institutions Are Here

Dear Bankless Nation,

When the third largest bank in France integrated with MakerDAO last October, we saw very early signs of how mainstream banks were coming.

That was six months ago.

Today, the institutions are finally here.

Traditional banks and investors are acknowledging crypto’s innovation and are ready to wet their beaks in the world of Web3.

Consider how one of the largest American banks Goldman Sachs has pivoted.

They went from “Cryptocurrencies is not an asset class” in 2020 to “Exploring the megatrends of cryptocurrencies that are reshaping economies” on their main landing page today.

Being a crypto-skeptic half a year ago was empty talk.

That skepticism today is starting to come with a price tag.

Continued skepticism is going to cost you dearly.

Goldman Sachs isn’t stupid — that’s why they’re changing their course of direction. The Web3 train is here and corporations are jumping on board before it leaves the station.

And you can bet there are many passengers rushing for a ticket.

Here’s a recap of familiar institutional names reported in the media just this past week alone:

• Goldman Sachs is the first major U.S. bank to announce its first over-the-counter crypto trade with crypto merchant bank Galaxy Digital.
• Qualcomm is launching a $100 million “Snapdragon Metaverse Fund” supporting builders in the metaverse.
• Robinhood is offering a new debit card with crypto rewards and investment options.
• An Australia “Big Four” bank ANZ is teaming up with blockchain infrastructure firm Fireblocks to create an AUD stablecoin
• Top hedge fund Bridgewater Associates, whose founder Ray Dalio holds Bitcoin, is reportedly gearing up to back its first crypto fund
• Alumni from Silicon Valley’s largest tech startup accelerator Y Combinator are launching a crypto investment platform, targeted at young women

That only includes what’s been public.

But what’s still under wraps? Who’s coming next? How many more central banks and private entities are planning their pivot into crypto?

This is a classic case of “if you can’t beat em, join em”.

As Bankless covered last week, even the climate of regulatory uncertainty is also starting to stabilize.

Bridging DeFi to TradFi

In the 20th century, traditional bank savings accounts used to function as their name implied.

The 1934 Glass-Steagall Act separated commercial (savings) banking from investment banking. This provided everyday Americans with a reliable way to accrue a slow but steady compounding interest rate on their savings for their retirements while avoiding the risks of investment banking.

But continued government debt accumulation and devaluation of fiat currency made savings accounts irrelevant. People who left their hard-earned monies in their banks are now victims of inflation.

To actually “save”, one then had to pursue active investment strategies into government bonds or the stock index.

DeFi is bringing back the old status quo for the average man.

Just this week, crypto lender Maple Finance surpassed a billion dollars in loans.

Yes, billion with a B.

A billion dollars is the amount of liquidity that big institutions are borrowing from thousands of small lenders through one DeFi protocol alone.

Small lenders are forsaking the measly interest rates that come with depositing their monies in a traditional “savings” account, in favor of better yields through a DeFi-integrated bridge to the TradFi world

📖  Click here to level up on Maple Finance from William Peaster.

While developers are busy building the multichain future within crypto, the bridges connecting TradFi to DeFi are coming up at the same time.

The lines between both worlds are blurring.

The institutions are no longer coming — they’re here.

Here’s what Bankless has lined up next week:

1. Lyn Alden and Justin Drake debate PoW vs. PoS.
2. David also shares his PoW vs. PoS argument in the newsletter.
3. Lucas is publishing an article on the best business this decade.

Until next week,

- Bankless Team