In brief

  • The Chicago DeFi Alliance has added new advisory members, including Aave and ParaFi.
  • Several traditional trading firms have already started providing liquidity and building trading strategies for DeFi protocols.
  • It comes at a time when the DeFi industry is experiencing exponential growth.

A new consortium bridging the worlds of DeFi and traditional trading has added more high-profile members to its ranks.

The Chicago DeFi Alliance announced on Wednesday the addition of 11 new members to the mentoring group, designed to help burgeoning DeFi protocols and other players in the space tackle the challenges of providing liquidity in a rapidly expanding market—one which just days ago exceeded $2 billion in total locked value for the first time. 

Among the new members are DeFi lending platform Aave and Silicon Valley VC firm ParaFi, two fast rising players in the world of DeFi.

Aave is one of the fastest growing DeFi apps around at the moment. Earlier this week, it launched credit delegation on its platform, enabling users who deposit digital assets to authorize other users to take out loans, similar to a co-signing agreement. The system has the potential to broaden the appeal of DeFi, offering a source of greater returns for large depositors and a fresh source of credit for users with few existing assets. 

ParaFi, incidentally, just invested $4.5 million in Aave, and made an undisclosed investment in Kyber Network through a purchase of KNC protocol tokens in the lead up to the KyberDAO staking upgrade.

Aave and ParaFi joining its ranks demonstrates the growing strength of the CDA as a networking and development vehicle.

Founded in April, the Chicago DeFi Alliance launched with support from TD Ameritrade, Volt Capital, and Jump Capital. The CDA provides guidance and support for select DeFi startups navigating regulations and complex asset trading operations. Since inception the group has gathered dozens of additional advisory members, including its most recent cohort.

Over the first six weeks of the program, the Chicago DeFi Alliance offered both roundtable discussion and one-on-one consulting with trading firms like DV Trading, CMT Digital, and Jump Trading. CMT Digital is particularly well integrated into the digital assets community, with investments in crypto options trading platforms Bakkt and ErisX and Circle, who in partnership with Coinbase founded the USDC stablecoin issuing entity Centre.

The six original members of the first cohort of the Chicago DeFi Alliance were Synthetix, Opyn, IDEX, Kyber Network, Token Sets, 0x, and DyDx. Nine advisory trading firms have signed on to provide liquidity to members of the initial cohort, and 11 have developed proof of concept trading strategies to deploy on DeFi trading platforms.

Of the initial cohort, Kyber Network has seen notable success in the first half of 2020. The automated token swap protocol recently rolled out a decentralized governance upgrade, and the KNC governance token is up more than 800% year to date.

“CDA has been incredibly helpful for Kyber in terms of understanding and connecting with top market makers in Chicago and beyond. We have set up collaborations with a number of market makers, and look forward to keeping in touch with the alliance,” Kyber Network CEO and co-founder Loi Luu said.

“[Imran Khan] and the CDA team have been going far and beyond in terms of coordinating all the parties involved, and we cannot be more impressed with their enthusiasm and purpose.”

Three Arrows Capital is among the new advisory members of the CDA, an investor in both crypto lending service BlockFi and options trading platform Deribit. Additional firms include Altonomy and Gauntlet, a simulation platform for financial models used by DeFi lending protocol Compound and variable-supply reserve currency provider Ampleforth.

“The DeFi Alliance provided us a unique opportunity to connect with traditional trading firms and understand their needs and pain points,” Opyn co-founder Alexis Gauba said. 

“This is invaluable feedback as we build out the protocol. We’re excited to continue to be a part of the DeFi Alliance and expand DeFi adoption.”

Applications for the second Chicago DeFi Alliance cohort are now open. The second batch of chosen applicants will be announced in August.

Disclaimer

The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.