In brief
- A number of Asian initiatives to help the Asian DeFi scene integrate with the Western one have sprung up.
- The latest is Open DeFi.
- It's spearheaded by Beijing-based Conflux.
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Beijing-based Conflux, a permissionless Ethereum-competitor that has received support from the Shanghai state government, today announced the launch of a decentralized finance consortium, Open DeFi.
Decentralized finance, also known as DeFi, is a catch-all term for the burgeoning industry of non-custodial financial services. Among other things, DeFi protocols let users lend and borrow cryptocurrencies, invest in tokenized stocks, and trade crypto on non-custodial exchanges.
At present, 37 of the 38 top decentralized finance applications listed on metrics site DeFi Pulse are housed on the Ethereum blockchain, and most founders of the largest projects call the Western world home.
Conflux’s new initiative, Open DeFi, will help “grow the broader decentralized ecosystem in Asia,” Eden Dhaliwal, Conflux’s global managing director, told Decrypt. Open DeFi will act as an incubator for Chinese DeFi startups “on the brink of cross-border growth,” as well as to help traditional financial institutions integrate DeFi, he said.
Open DeFi’s members include powerhouse venture capital firms Sequoia Capital, Blockpower Capital and DeFi protocol dForce (Binance, the world’s largest cryptocurrency exchange by volume, is “still considering joining,” a spokesperson for the project told Decrypt), and the whole project is supported by the Shanghai Science and Technology Committee. So far, DeBank and MCDEX, two small Chinese startups, have confirmed their involvement.
Open DeFi is one of several blockchain initiatives from Asian companies geared toward matching Asian DeFi startups with the Western market.
The DeFi wing of Singapore-headquartered crypto exchange Huobi launched a similar project just two weeks ago. The “Global DeFi Alliance” comprises major Western DeFi projects, such as MakerDAO and Compound, and also aims to solve “the divide between Asian and Western DeFi communities."
The flurry of interest is no surprise to industry observers: a staggering $9 billion is now locked up in DeFi smart contracts, according to DeFi Pulse, and $8 billion of this was added in the past three months alone.
“DeFi is becoming an indispensable force of the blockchain ecosystem. Many new initiatives are happening and Open DeFi is a platform to encourage such innovation and entrepreneurship,” Hao Wang, Vice President, Sequoia China, told Decrypt.
Open DeFi’s inaugural meeting will take place this month. There, members will work out how to help Chinese DeFi startups get involved in the larger, established Western projects.
Some of its members will ensure that the smart contracts are safe and that their economic models make sense. Others, including institutional investors, crypto exchanges, and quantitative trading firms will work on new trading strategies. More still will help Chinese companies market themselves to Western markets.
Open DeFi’s inclusion of venture capitalist firms is noteworthy. Like so many projects operating under the banner of DeFi, that venture capitalists are involved suggests that Open DeFi isn’t…entirely decentralized.
In fact, relax your definition of DeFi to include any blockchain project related to finance—not just the narrow selection of decentralized protocols gunning for complete decentralization—and Western and Eastern DeFi markets are not terribly distinct.
Binance, OKEx, Huobi and TRON, all Chinese blockchain companies (often headquartered in tax havens, like Singapore or Malta), are all busy building financial services on the blockchain. And several major Chinese companies, among them Baidu and Ping An, are massive players in blockchain-based financial services.