Citibank Covers DeFi, says Open Financial Platform Enables ‘Greater Innovation and Competition’
New York City-based Citigroup is the latest bank to educate its fund managers on the concept of the booming decentralized finance (DeFi) sector.
This week, much like other banking giants, Citi reported better-than-expected earnings for the first quarter, driven by lower loan volumes and improvements in the macroeconomic outlook.
Defined as the “open financial platform on top of which all projects reside,” the openness of the ecosystem enables greater innovation and competition and allows uninterrupted interoperability, it said.
Programmability, transparency, permission-less, non-custodial, and lack of intermediaries are the benefits mentioned by the bank.
The report particualry covers MakerDAO in detail, calling it “The Decentral Bank,” a complication system that enables collateralized loans paid out in stablecoin. DAI is the network’s own crypto-based stablecoin which the bank says is akin to “so-called commercial bank money, which is backed by deposits or cash.”
It is defined as the heart of the DeFi ecosystem, which is one of the oldest and “most sophisticated projects on Ethereum.” ETH -3.62% Ethereum / USD ETHUSD $ 2,440.76
-$88.36-3.62% Volume 36.12 b Change -$88.36 Open $2,440.76 Circulating 115.5 m Market Cap 281.9 b
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The report then talks about how the lending protocol, which has over $9 billion in total value locked (TVL), can be thought of as a digital pawn shop or a perpetual repo market for digital assets.
The world is going to wake up to DeFi https://t.co/SAUHrB5JkU
— Hunter Horsley (@HHorsley) April 16, 2021
The DeFi sector is growing at a fast pace, which first exploded into usage last summer when yield farming allowed people to earn as high as four-digit APY. From a mere $730 million in total value locked a year back, today, this sector has surpassed $100 billion in TVL.
The top 100 DeFi coins’ market cap has also reached about $130 billion, which was under $2 billion at the beginning of last year, as per CoinGecko.