Institutional investors just got one more high-risk way to play the crypto market.
On Oct. 3, Ribbon Finance, a DeFi derivatives platform, launched an offering called Lend that allows users to make unsecured loans to institutions.
Ribbon is billing Lend as an “uncollateralized Aave” that permits users to pull their capital at any time and not lock it up. Aave does that, too.
Pocketing 9% APR
Lend’s interface shows that users have deposited $1M in USDC to make loans to Wintermute, a major crypto market maker, and Folkvang, a quantitative trading firm backed by crypto billionaire Sam Bankman-Fried.
The lenders are pocketing a 9% APR in return for lending to both institutions, according to Lend’s data.
This isn’t the only project which allows anyone with a crypto wallet to lend to institutions — projects like Maple Finance have facilitated $1.8B in loans to big players like Alameda Research, a trading firm affiliated with FTX, one of crypto’s largest exchanges.
Ribbon is using Credora, a platform which evaluates institutions’ creditworthiness, to assign ratings to the institutions. Lend customers must also submit to know-your-customer reviews.
In terms of product launches and plans, Ribbon is clearly building through the bear market — last week, the Ribbon team announced an options exchange geared towards professional traders. The Ribbon team will build the exchange on a custom rollup which settles on Ethereum.
Rollups help Ethereum scale by processing transactions on a separate blockchain before Ethereum’s mainnet confirms them. So far, the major rollup solutions like Aribitrum and Optimism have been general purpose, which differs from Ribbon’s application-specific rollup.
Ribbon is down over 50% in ETH terms since reaching an all-time high of over 125,000 ETH in total value locked in early May.