Lombard, the company that builds Bitcoin-based lending technology, is partnering with Bitwise Asset Management in order to help institutions earn yields and to borrow Bitcoin.BTCWithout moving assets, the goal is to free hundreds of billions in Bitcoin from institutional custody.
This partnership was officially announced at the Digital Asset Summit, held in New York on Tuesday.
Jacob Phillips told Cointelegraph he is CEO of Lombard and the co-founder.
The breakthrough is Bitcoin Smart Accounts—connecting two previously isolated worlds: institutional custody and onchain finance.
An announcement made to Cointelegraph revealed that Bitwise would develop strategies for combining DeFi with tokenized assets in the real world, and Morpho, which is a decentralized protocol of lending, will be providing infrastructure lending against Bitcoin.
Platform uses Bitcoin native tools, such as timelocks and partially-signed transactions to verify collateral. This allows positions to be displayed onchain without having to transfer or rehypothecate the assets.
Phillips suggested that instead of relying upon bridges and wrapped assets “Bitcoin Smart Accounts eliminate all three risk vectors simultaneously,” Addressing the risks of counterparty and custody that historically have limited Bitcoin institutional lending.
This offering is aimed at high net worth individuals, asset management firms and corporate treasurers who want to use their long held Bitcoin positions without having to change custody arrangements.
Lombard is planning to introduce more protocols and custodians to extend access across institutional Bitcoin investments.
Phillips stated that the model may change how institutional Bitcoin allocations are approached.
Bitcoin is being transformed from a simple store of value into a productive capital for institutions. It’s a shift.
He said that Bitcoin has traditionally been used in institutional portfolios as a passive value store, and there are few options for generating yields or accessing liquidity, without leaving custody or taking on counterparty risks or trigger taxable events.
Lombard estimated that 500 billion dollars worth of cryptos are held in institution custody.
Related: Sygnum Bank bets on Bitcoin lending with multisignature custody model
Bitcoin DeFi gain traction with vaults, lending and expanding
Data from DefiLlama shows Bitcoins’ total value is locked into DeFi, which amounts to approximately $2.93billion. This represents a tiny fraction of the market’s $1.4trillion. capitalization. As efforts gain momentum to transform Bitcoin into an asset that generates income, the pace of change is increasing.
Onchain vaults are a key factor, as they act like investment funds and deploy capital to DeFi strategies. In January, Bitwise announced a tie-up with DeFi lending protocol Morpho Launch non-custodial banks to produce yields through the overcollateralized loan.
In recent months, the trend has increased. In February, Telegram added yield-generating vaults Its integrated crypto wallet lets users earn Bitcoin, Ether or USDT from within the application.
The month of March is a time for celebration. Bitcoin staking protocol Babylon Integrated with Ledger hardware wallet, users can deploy BTC into financial applications and maintain self-custody by using hardware transaction signing.
As of the date this article was written, Babylon Protocol is leading Bitcoin-based DeFi, with about $2.8 Billion in total locked value, while Lombard comes second, with approximately $744 Million.
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Source: cointelegraph.com
