Alameda Research, one of the largest crypto market trading firms, is bypassing banks to borrow up to $1 billion in new funds from peers as it looks to expand its operations, in The first debt syndication on the decentralized financial market.
A computer-controlled trading company specializing in buying and selling digital assets is owned by one of the richest men in the crypto space, Sam Bankman-Fried, founder and CEO. of the FTX exchange.
On Thursday, Alameda will mine a pool of stablecoin funds deposited by five investors for a $25 million syndicated loan, which will take place on blockchain infrastructure powered by the Maple Finance marketplace. This will be the first in a series of withdrawals that are expected to hit $1 billion within a year, with early lenders including digital asset managers CoinShares and Abra.
Stablecoins are cryptocurrencies pegged to other assets, usually the largest and most stable currencies in the world.
The Alameda Agreement cuts off banks and other intermediaries from arranging new financing. Instead, it will test the utility of decentralized finance or the ‘DeFi’ market, which has exploded in size over the past 12 months.
“The flexibility that comes from a decentralized, on-chain lending platform like this one helps Alameda adapt to [a fast growing] Sam Trabucco, co-CEO of Alameda, said.
Trabucco said the company uses stablecoins for its trading operations and hopes that by mining industry peers directly, it will get financing cheaper and faster than banks. .
According to a new study from data firm Elliptic, the DeFi market has grown 1,700% over the past year, reaching a total value of $247 billion. Trading volume on decentralized exchanges has experienced similar growth with over $300 billion worth of transactions taking place each month.
However, the rapid pace of development also saw both hacking and theft. According to Tom Robinson, chief scientist and co-founder of Elliptic, investors have lost more than $10.5 billion this year to theft and fraud in the DeFi marketplace. In 2020, such a loss is $1.5 billion.
He added: “The relative immaturity of the underlying technology has allowed hackers to steal users’ funds, while the deep liquidity has allowed criminals to launder the proceeds of crimes such as ransomware and fraud cheat”.
