In brief

  • Anchorage now supports custody of five new DeFi tokens: Uniswap’s UNI token, AAVE, BAL, NXM, and YFI.
  • The five DeFi protocol tokens are used as votes to control governance of their respective projects.
  • By adding DeFi tokens, Anchorage makes it easier for institutions and investment advisors to gain exposure to the DeFi ecosystem.

Visa-backed crypto custody service Anchorage has added a set of leading DeFi protocols to its service. The idea is to make it easier for institutions and financial advisors to gain exposure to the emerging alternative financial ecosystem.

Anchorage added support for five DeFi governance tokens, including the recently released UNI token connected to the Uniswap decentralized exchange. It also added tokens from decentralized exchange and indexing protocol Balancer, lending platform Aave, yield optimization protocol Yearn Finance, and DeFi insurance provider Nexus Mutual. 

These five tokens each represent a tradable stake in governance of the DeFi protocols themselves. Collectively, they have garnered billions in user funds, allowing holders to facilitate token swaps, generate loans, and/or earn interest on deposited assets. 

Anchorage holds keys to digital assets in highly secure settings on behalf of its customers. The new additions should make it easier for institutional clients and new entrants to confidently invest in the rapidly growing DeFi products. According to DeFi Pulse, value locked in DeFi has increased from less than $2 billion at the end of June to more than $9 billion today, and Uniswap’s UNI token is up more than 60% since launching on September 16.

DeFi protocols operate using automated code contained in smart contracts. They make it possible, for instance, to deposit one set of crypto assets as collateral for a loan in a different crypto asset without going through a centralized institution, like a bank. But while the protocols operate automatically, decisions like setting interest rates on deposits or creating partnerships still require human intervention. 

Governance tokens like UNI represent voting rights for those decisions. By committing, or “staking,” a certain number of tokens, users can bring a proposal for a vote or cast ballots for a particular outcome. Governance tokens are also tradable among users, making them potentially lucrative investments; as the value of the underlying protocols increase, so too should the value of voting rights to control them.

Anchorage has previously added support for other DeFi protocols, among them lending services Compound and Maker, in addition to more established digital assets like Bitcoin and Ethereum. The recent additions, however, signal a broader shift taking hold in the crypto landscape, as the utility and earnings generated by DeFi push the assets into investors’ portfolios.