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Tried and Failed: Maker Foundation's Attempt to Patent "DeFi"

Set out to rid the decentralized finance space, free from scammers, DeFi creators tried to patent the term ‘DeFi’. However, this was short-lived as the United States Patent and Trademark Office rejected the registered application last January. Since then, Maker has no plans to refile.

DeFi’s product portfolio is varied, from loan to loans and commercial products. As their portfolio increases, they are equally ahead in terms of competitive advantage, as such their ether locked contracts and funds blocked in the contracts can be used as a stimulant for the demand of DeFi products. To put in numbers, Maker generated 1.4 million ether in contracts valued at an estimated $272 million (reported as of 23 Aug).

As the filing of Maker suggests, DeFi is defined as the root for all “online currency market service”, such as creating a market whereby digital asset trading is possible. The foundation itself constitutes of two ERC – 20 Tokens alongside the stablecoin (DAI) and Maker (MKR).

In an interview, Maker’s initial efforts were to try and speak on improving the ecosystem:

“The Maker Foundation applied to the registered trademark “DeFi” intending to make it available to the entire community for free use, while protecting the brand from being captured by bad actors. We saw other projects trying to mark the “stablecoin” brand and we didn’t want that to happen here too.”

Mark Bronstein of Dharma supported Maker in his attempts to prevent those fraudulently exploiting the system and protecting the necessary and legal resources keeping intact the integrity of the movement.

“We are glad that Maker has taken steps to prevent rent-seekers from exploiting what is clearly a community-driven meme.”

Images via Shutterstock

Argo Blockchain Secures $20M Loan to Build Out West Texas Mining Facility

Argo Blockchain Plc, a London-based publicly listed crypto mining firm, has announced that it has secured a £14 million ($20 million) loan from Galaxy Digital.

As unveiled by the firm, the loan will last six months and support the firm in its expansion drives without selling off its current Bitcoin holdings.

According to the firm, the loan facility will bolster earlier funds raised by the firm and build a new data centre in West Texas. The company is also seeking to use the loan proceeds to meet operating cash flow requirements. The firm has filed in its Bitcoin assets as collateral for the loan.

“We are delighted to work with @GalaxyDigitalHQ as we pursue our growth plans and to form a solid relationship with them as a financing partner,” said Peter Wall, the Chief Executive Officer of Argo Blockchain. “This agreement allows Argo to secure competitive terms on a loan facility while also allowing us to continue to HODL our Bitcoin.”

HODLing its Bitcoin holdings is essential as the market currently experiencing a bearish downturn, and sell-offs at this time may not bring about profitability. Meanwhile, the company’s expansion into North America is coming on the heels of the Chinese government enforcing a ban on all crypto-related activities, including mining.

The ban has resulted in the migration of miners, and many industry proponents see this situation as the ideal time for industry stakeholders to take advantage of the current gap in mining to establish a foothold. The expansion into North America, and the crypto-friendly Texas state, show the company’s readiness to take advantage of the trends in the ecosystem. The company had been making plans for this move before this time as it recently unveiled the acquisition of 320 acres of land to build out the facility.

NFT-collateralized Loan Platform Arcade Raises $15M in Series A Financing

Focusing on using NFT as loan collateral, Arcade raised US$15 million in Series A financing which was led by Pantera Capital, Castle Island Ventures, and Franklin Templeton Blockchain Fund.

The purpose of Series A financing is to incentivize the participation of institutional investors to support the NFT field.

Arcade is a platform that supports NFT as collateral for lending, which connects borrowers and lenders to liquidize idle assets, thereby achieving a wide range of practicality and ERC20 tokens-tokens that designed and used solely on the Ethereum platform and followed a list of standards so that they can be shared, exchanged for other tokens, or transferred to a crypto-wallet fully compatible.

Other investors include Golden Tree Asset Management, Eniac Ventures, Protofund, Maybe Nothing Capital and Lemnis Carp. Angel investors include BlockFi CEO Zac Prince and Quantstamp CEO Richard Ma.

Gabe Frank, the co-founder of Arcade, said that in a Wednesday announcement:

“The DeFi industry currently contains over $200B in Total Locked Value, with NFTs accounting for a significant portion of that value; however, the lack of infrastructure in DeFi prevents NFT holders from achieving liquidity on their holdings despite massive marketcaps.”

The Arcade platform has developed its proprietary technology called Wrapped NFT (wNFT) and users who need to obtain a loan can bundle multiple NFT assets under their name and use them to obtain a single loan.

In its private release, Arcade facilitated the largest and first unlicensed on-chain loan of US$800,000 for the NFT portfolio from a lender with a market value of more than US$10 Billion.

The loan amount for this transaction is added to the total amount of US$3.3 million in loans obtained during the entire Arcade private offering, and the total amount of loans on its platform is as high as US$10 million.

Kraken Develops NFT Trading Platform, Offering Token-Backed Loans

On December 24, U.S.-based cryptocurrency exchange Kraken announced that it is developing a marketplace for NFTs where users can trade digital art and collectables and organize loans using the tokens as collateral.

Jesse Powell, the CEO and founder of Kraken, accepted an interview with Bloomberg media outlets. He disclosed that the exchange is developing a marketplace that will offer custodial services for NFTs and facilitate loans for users using such assets as collateral.

In his conversation, the Kraken CEO regarded 2021 as the year of nonfungible tokens, which will be remembered in history as the period in which NFTs become mainstream. Powell admitted that interest in NFTs has been increasing, thus driving a rise in capital inflow. He expects rising demand to attract retail and institutional investors to the NFT platform and provide more than selling and buying digital art and collectables.

Powell talked about the development and said: “If you depos’t a CryptoPunk on Kraken, we want to be able to reflect the value of that in your account. And if you want to borrow funds against that.”

The Rush to Make Money on NFTs

Kraken follows major exchanges such as Gemini, Binance, Coinbase, and FTX to develop an NFT market as the assets continue to surge in popularity. As reported by Blockchain.News, nonfungible tokens’ market has grown to currently worth more than $7 billion, according to nonfungible.com and tech-tracking company L’Atelier BNP Paribas. In 2020, investments in NFTs has increased by nearly three times, gaining popularity as crypto-assets such as Bitcoin continue to boom. Opensea, the largest marketplace for NFTs, recently conducted more than $2 billion in trading volume in the last 30 days, according to Crypto data firm DappRada.

NFT resellers and creators have made hundreds of millions. In March, artist Beeple smashed digital art records and became one of the most successful living artists when he sold a crypto art piece for almost $70 million. NFTs encompass digital real estate, virtual gaming, digital trading cards, and art. Unlike major crypto coins such as Bitcoin and Ethereum, NFTs cannot be directly exchanged with one another and are spread out across many different types of platforms. Of course, most platforms require users to have a digital wallet and use crypto platforms.

Investment Giant Goldman Sachs Offers the First Bitcoin-backed Lending Loan

New York-based multinational investment bank Goldman Sachs announced that the investment bank has launched a bitcoin-backed lending loan.

This is the first over-the-counter bitcoin option traded in March by Goldman Sachs Group to further provide digital asset services to Wall Street investors. The company said lenders can use the bitcoin they own as cash collateral to make loans.

A spokeswoman for the investment bank said Goldman’s interest was drawn to the bitcoin-backed lending facility because of its unique structure and required 24-hour risk management, adding that this step marks the entry of Goldman Sachs Group into a new line of business.

Last May, Goldman created a cryptocurrency trading desk to make markets in digital currencies such as Bitcoin. The move marked its major step in digital assets investing.

Goldman also assigned Galaxy, the crypto merchant bank founded by Mike Novogratz, to serve as its liquidity provider to help it equip its clients with best-execution pricing and secure access to the assets they want to trade.

MacroStrategy, a subsidiary of MicroStrategy, a US business software firm, announced Tuesday that it secured a $205 million term loan from Silvergate Bank, a crypto-focused bank.

Last month, Goldman Sachs Group Inc. reviewed how it can meet increasing client demand to own and invest in Bitcoin, while still staying on the right side of the law.

US-Based Mortgage Firm Permits Homebuyers to Use Crypto Holdings as Collateral

Milo, a financial technology company that reimagines mortgage credit, removes the obstacle for down payments if homebuyers use crypto holdings as collateral for home loans.

Miami-based Milo is willing to lend out individual home loans of up to $5 million to borrowers if they present the sufficient amount of Ethereum and Bitcoin they hold before being transferred to a custodian for safekeeping.

Homebuyers now are available to pay monthly at the same rate as regular mortgages, either in crypto or cash. Still, the lender has to access the stored crypto if the borrowers default.

Therefore, homebuyers would benefit from these latest options on two fronts because they will purchase properties that are likely to shoot up and also gain from a value increase in their cryptocurrencies.

Having used a seven-figure loan anchored in crypto, Vincent Burniske was able to buy two small apartment buildings located in Coral Gables, Miami.

The sports-media consultant noted:

“I was convinced I was going down the conventional loan path. It’s comfortable. It’s what we know. But at any given moment, there are better financing options, and you really need to pay attention.”

Measures to curb crypto volatility

Milo has established measures to safeguard itself if a shock plunge is experienced in the crypto market. Per the report:

“If the value of the crypto collateral drops to below 65 percent of the loan amount, the borrower will be asked to provide more crypto or cash.”

The report added:

“If the value of the currency drops below 30 percent, Milo will immediately liquidate the Bitcoin or Ethereum and store that amount in traditional US dollars.”

With Milo having processed mortgages worth $340 million in March alone, the financial company seeks to refine this sector using new technologies like crypto.

Joseph Rupena, Milo’s founder, acknowledged:

“Milo will be looking to provide other long-term solutions to those with crypto wealth — not just mortgages.”

Therefore, the crypto sector is finding its new way into the mortgage sector.

For instance, Figure Technologies, a US financial technology company, recently launched a cryptocurrency-backed mortgage trading service that enabled customers to borrow against their Bitcoin or Ether to fund home purchases.

Singapore’s Cake DeFi Launches New Loan Service, Accepting Crypto as Collateral

Cake DeFi, a Singapore-based fintech platform, announced on Thursday that it has launched a new decentralized finance (DeFi) service that lets users get loans using cryptocurrencies as collateral.

The fintech firm said that the new service – which is called Borrow – allows customers to take a loan in decentralized USD stablecoin (DefiDollars), using their Bitcoin (BTC), Ether (ETH), Tether (USDT), USD Coin (USDC), or DeFi Chain (DFI) tokens as collateral, at a preset collateralization ratio of 200% and 5% annual percentage rate (APR), which are subject to change.

Cake DeFi further stated that customers can then spend the borrowed DUSD stablecoin to purchase items or invest in Cake DeFi’s passive income-generating solutions like staking, lending, and liquidity mining, either directly or after swapping it with other coins.

Julian Hosp, Cake DeFi co-founder and CEO, talked about the development and said that the launch of the new product came as a result of strong demand for personal and commercial loans that accept cryptocurrency as collateral. He cited a study by fintech company Stilt that identified that 94% of crypto users are either Generation Z or millennials.

“We are excited to launch Borrow, to provide users with more liquidity to invest in DeFi services while holding on to their assets. DeFi empowers people to generate passive income on their cryptocurrencies without the constant need to trade. It is our goal at Cake DeFi to keep bringing such innovative services to our users,” Hosp elaborated.

Facilitating Innovation and Growth

Early last month, Cake DeFi launched its corporate venture arm with $100 million in the capital.

The new venture arm, called Cake DeFi Ventures, focuses its investments across the metaverse, Web3, the NFT space, fintech, gaming, and esports spaces so as to benefit the core business of the parent company.

Cake DeFi was established in 2019 as a firm dedicated to solving people’s financial problems. The mission of the company is to inform and educate global users about cryptocurrency and DeFi in a simple, understandable, and straightforward manner.

The firm is a fully compliant platform, registered by the Monetary Authority of Singapore (MAS). Currently, Cake DeFi manages over $1 billion in customer assets and has about 500,000 customers globally. The fintech platform focuses on creating DeFi services and applications such as liquidity mining, staking, and lending, which generates crypto returns for users.

Bitfarms Sells 1500 BTC Goes for New Loan to Boost Liquidity

Bitfarms Ltd, a global Bitcoin self-mining company headquartered in Canada, announced on Friday that it entered into an equipment financing agreement to stabilize its financials amid the plunge in crypto prices.

Bitfarms announced plans to sell 1,500 BTC of its mined Bitcoins in order to reduce a Bitcoin-backed credit facility it put into place in December with Galaxy Digital Holdings (GLXY). The firm intends to reduce the outstanding debt related to the facility by one-third, reducing the US$100 million loan to US$66.0 million.

Since the Galaxy facility was set to expire on June 30, Bitfarms is now negotiating with Mike Novogratz’s crypto merchant bank to renew the line. The sale of 1,500 Bitcoin to raise $34 million will help Bitfarms partially pay down the loan. To raise $34 million means that the Bitcoins were sold at the recent average price of about $22,000 per coin.

Besides that, Bitfarms has entered a new $37 million equipment financing deal with NYDIG at a 12% interest rate. Bitfarms collateralized the loan by the mining rigs at the company’s Leger and Bunker facilities.

This means that the NYDIG equipment financing agreement offers non-dilutive funding to Bitfarms’ miners to support growth in Quebec. In other words, the agreement provides equipment financing at an interest rate of 12% per annum collateralized by Bitfarms at the company’s Leger and Bunker facilities, funded as the assets are installed and become operational.

Initial funding of US$37 million has been completed with Bitfarms also in talks with NYDIG for additional funding, which might come in July and October as construction continues at the miner’s Bunker facility.

Reduced Profitability

Last year, Bitcoin’s price surged as high as $68,000. The move made miners earn profits as high as 90%. As a result, many of them expanded their operations at a rapid pace and started 2022 with great fortune. However, Bitcoin mining has recently become less profitable as the price of the crypto has dropped downwards. Cryptocurrency markets have slid, with Bitcoin’s price currently trading at $20,573 at the time of writing.

Some major mining firms such as Riot, Marathon, and Core Scientific, that prefer not to shut down their rigs, have decided to raise capital in the debt or equity markets or sell off some of their Bitcoin holdings in order to sustain their business operations.

Argo Blockchain recently announced a plan to raise debt and sell some of its Bitcoin to cover expenses. Core Scientific has already sold some of its mined Bitcoin this year and planned to continue doing so. Most of these firms have missed their bullish revenue estimates and have conservatively revised their expansion plans.

Some miners also have resorted to buying newer mining rigs to churn out more Bitcoin to make mining more profitable. A few days ago, CleanSpark ordered purchases of new Bitcoin mining rigs.

Voyager Digital Issues Loan Default Notice to Three Arrows Capital on over $670 million Debt

Crypto-asset broker Voyager Digital has issued a notice of default to cryptocurrency-focused hedge fund Three Arrows Capital Ltd (3AC) after the financially troubled hedge fund firm failed to make the required payments on its loan worth more than $670 million.

Voyager issued a notice on Monday morning, saying that 3AC has defaulted on a loan worth 350 million in USDC stablecoin and $323 million in 15,250 Bitcoins at today’s prices.

Voyager disclosed it intends to pursue asset recovery from Three Arrows Capital and has been discussing legal remedies available to recover the amount from the hedge fund.

Meanwhile, Voyager has clarified that the brokerage platform continues to operate and fulfil customer orders and withdrawals.

Voyager CEO Stephen Ehrlich, further commented: “We are working diligently and expeditiously to strengthen our balance sheet and pursuing options so we can continue to meet customer liquidity demands.”

On Thursday last week, Voyager reduced its daily withdrawal limit from $25,000 to $10,000 after it revealed its exposure to struggling hedge fund 3AC.

The crypto broker was hit by a financial crisis triggered by the current market downturn. As of Friday, Voyager stated it had approximately $137 million in U.S. dollars and owned crypto assets.

As part of efforts to revive its financial health situation, Voyager said on Monday, yesterday’s statement, that it had accessed US$75 million of a revolving line of credit previously made available by VC fund Alameda Ventures, FTX founder Sam Bankman-Fried’s quantitative trading firm.

On Friday last week, Alameda Ventures provided Voyager with a line of credit worth $500 million (a US$200 million cash and USDC revolver as well as 15,000 Bitcoins worth $318 million revolvers). The funds are intended to help Voyager meet customer liquidity needs during this challenging financial period.

By borrowing funds from Alameda, Voyager will use its finances to meet customer liquidity demands and strengthen operations.

The news follows the move by crypto lending platform BlockFi to secure a $250 million loan from FTX. Last Friday, BlockFi secured the loan to further bolster its balance sheet and strengthen its platform after the crypto broker faced liquidity crisis fears, as the crypto industry faces a meltdown. Following the loan, FTX is reportedly in talks to acquire a stake in BlockFi.

Voyager has become one of the latest crypto firms hit by the recent market downturn. Besides BlockFi, lending platforms Celsius Network and Finblox recently suspended withdrawals to mitigate risks following fears of market contagion amid Three Arrows’ troubles.

Hurt by the current difficult crypto market conditions, Three Arrows Capital is exploring options including a sale of assets and a bailout by another company.

Exchange Buenbit Rolls Out Crypto Loan Products in Argentina

Buenbit, an Argentina-based crypto exchange with operations in Mexico and Peru, announced on Monday that it has launched a local currency loan product that uses cryptocurrency as collateral.

In Argentina, customers will use MakerDAO’s stablecoin, DAI, as collateral and withdraw up to one million nuARS, a stablecoin tied to the Argentine peso, the firm said.

nuARS, a stablecoin developed by Num Finance, operates on Binance’s blockchain.

Federico Ogue, Buenbit’s CEO, described the crypto loan product as the first of this nature in Latin America. Ogue further commented: “It is a model that emerged abroad but with loans in U.S. dollars, but it does not work for Latin Americans. Who wants to borrow U.S. dollars in the region? Too much risk.”

Buenbit said customers can borrow for loans provided they collateralized 80% of the requested amount and added that the DAI will be locked into the platform yielding returns.

Users will be able to use nuARS to buy other cryptocurrencies on the Buenbit platform, withdraw or spend them via the prepaid card offered by the exchange, the firm stated.

Buenbit said that it plans to launch a similar loan product in Peru through a partnership with Num Finance. This will come through once Num Finance launches nuPEN and nuMXN, two stablecoins tied to the Peruvian and Mexican currencies.

Apart from the crypto loan product, Buenbit disclosed that it is in talks with investors to raise a new funding round in the third quarter of 2022. Ogue said the funding would be smaller than the $11 million Series A that the company raised in July 2021.

“This is a smaller round so as not to commit to a scenario of uncertainty. We will wait to do a bigger round next year with a clearer picture,” Ogue explained.

Buenbit also plans to expand its presence in Gibraltar once it obtains an exchange license in three months, following an 18-month process. Bitso, a crypto exchange based in Mexico, holds a similar license.

Tech Firms Impacted by Inflation Crisis

In May, Buenbit laid off about 80 employees of its workforce – 45% of its staff because of the current economic challenges that are impacting the tech industry. During that time, Ogue clarified that the layoffs were not linked with the collapse of UST and LUNA.

Buenbit also suspended its plans to expand into new countries, including Chile and Colombia, due to the “global overhaul” of the tech industry.

In May, Latin American crypto exchange Bitso also laid off 80 employees. The crypto business is currently witnessing turbulent times triggered by the ongoing crypto winter that has forced many tech firms to shut down operations and put a freeze on hiring.

Crypto markets are struggling to thrive after a series of economic events set in like the Luna Terra crash, higher interest rates by Feds coupled with regulatory uncertainty and investors pulling away from the markets.