Wall Street trading house Jane Street, known for its dominance in markets such as exchange-traded funds and corporate bonds, is turning its attention to decentralized finance (DeFi). The trading giant will lend up to $50 million in USDC through a decentralized lending platform.
According to Bloomberg, Jane Street will borrow the capital through "Clearpool" from crypto firm BlockTower Capital. This is a DeFi marketplace where institutions can obtain unsecured liquidity from a network of lenders. The platform is similar to market leader Aave's institutional pools, through which traditional financial firms can also participate in the emerging DeFi space.
Decisive moment for DeFi
It is the first time a major Wall Street institution has completed a lending transaction on a DeFi protocol. Jane Street is a quantitative trading firm and liquidity provider with a team of over 1'700 employees and offices in New York, London, Hong Kong and Amsterdam. With approximately $17 trillion in annual trading volume, the firm is one of the largest market makers in the world.
BlockTower, a leading crypto investment firm and active participant in the DeFi lending space, is the lender of this KYC/AML compliant "Permissioned Pool" in the process. Permissioned Pools allow borrowers with higher KYC requirements to take advantage of Clearpool's access to efficient capital, with full visibility of the pool's lenders. Protocols like Clearpool offer institutional borrowers the opportunity to apply for stablecoin liquidity from a decentralized network. This allows funds to be borrowed for attractive interest rates without collateral behind them.
Jane Street gets involved in the crypto industry
This isn't the first time the trading giant has dabbled in crypto. In March, Jane Street invested in Bastion, a decentralized credit protocol based on the NEAR blockchain. Jane Street was also among the 50 investors who participated in DEX aggregator 1inch's Series B. Compared to competitors such as Jump Trading and GSR, Jane Street's risk-taking activity has been low-key to date. Despite their huge trading volume, the company is taking their crypto ambitions slowly.
Crypto trading has become a clear growth area for Jane Street in recent years, leading to their interest in unsecured crypto lending opportunities in the DeFi space. This transaction illustrates for their flow between traditional capital markets and the burgeoning DeFi ecosystem.