2017 & 2018 had ICOs, 2019 had IEOs, & 2020 has decentralized finance. DeFi, as this sector of the crypto market has been dubbed, has developed to be one of the most talked-about subjects in current months. Bloomberg released an entire guide on it, 4chan is obsessed about it, and even members of the secretive online investing group Value Investors Club have discussed it.
Few, though, are not diving headfirst into this segment of the market, despite the life-changing increases that some have demanded to have made.
Galaxy Digital, the crypto investment bank originated by Wall Street veteran Mike Novogratz, is one of these entities hesitant to dive into DeFi. Here’s why they’re keeping on for now.
Galaxy Digital was asked about Ethereum DeFi in an earnings call
The gains that some have made through DeFi protocols & coins have been stellar. Tokens about this space have rushed 100,000 percent in a week while specific protocols offer incentives that can generate hundreds of percent a year on the preliminary investment. Some have cried that these trends are unmaintainable & while they might be, there persist many try to milk the DeFi cow for all its worth.
Galaxy Digital, though, is taking it slow.
The company held its Q2 2020 earnings call on Aug. 14, where executives like Mike Novogratz broke down the company’s performance & plans for the future. Adjacent to the end of the call, Galaxy opened the floor to analysts.
Mitch Steves of RBC Capital asked if the company intended on participating in “[yield] farming and decentralized finance” to “generate additional returns”:
“So as you guys know, there’s a very popular way of earning money in crypto, the crypto space – and both farming and decentralized finance, right. So if I think about where you are position now, is there any, I guess, any plans are you able to participate in that market to help generate additional returns?“
The reason, they’re not entering DeFi:
Galaxy Digital, astonishing some, supposed that it is not dabbling in DeFi at the moment.
After being handed the mic by Novogratz, company president Chris Ferraro held that the company has a team actively researching DeFi at the “protocol level, weighing “all” protocols & coins by analyzing their regulatory compliance, competition, and more. While the company is putting these resources to work in DeFi, Ferraro added that their involvement in the space in terms of investments is minimal.
“We’re making investments in technology around implementing into DeFi as opposed to necessarily interacting with the DeFi protocols ourselves. They’re still pretty small.“
On why Galaxy Digital is making infrastructure investments instead of attempting to “yield farm,” the executive elucidated that they need to wait on
“how the regulatory framework evolves, how it scales and whether it makes sense to us to really be involved directly.“