With over $20B of crypto-collateral being used to generate over $100M of interest on a quarterly basis, credit is one of the most rapidly growing sectors of the maturing crypto finance ecosystem. While companies have historically been limited to raising equity capital, the growth of a robust asset-backed lending market has been a game changer for industry growth, enabling firms to expand their balance sheets with debt. Lastly, in absence of formal rate setting mechanisms, the industry's growing credit ecosystem is instrumental in establishing rates and informing the development of a crypto yield curve, which prices risk and duration.
CoinShares is excited to announce our Crypto Credit Summit – a virtual event where startups, corporates, and investors from both traditional and decentralized finance will come together to explore the evolution of credit in the crypto industry.
Over the course of three days (Nov. 17-19), we'll host a series of expert discussions on all things crypto credit – beginning with the world of trading, margin, and rates, exploring types of collateral and new blockchain-based credit primitives, and closing with how these innovations enable new types of credit products.
Day 1: Capital Markets and Trade Leverage
Tuesday Nov 17 from 4:30 - 7:00 pm ET
The first credit market in crypto stemmed from the need for trade leverage. Nearly every trading desk in the industry is active in this market in some way, shape, or form today, making it challenging to estimate the actual size of the market.
Today, the crypto-collateralized lending market is estimated to originate over $10B in quarterly loan volume. Historically crypto loans have been collateralized with a highly liquid and readily saleable asset, bitcoin, and the level of risk was perceived to be low. However, this March, when bitcoin dipped 50% in a 24-hour period, these parameters were tested. Discussion topics include trade leverage, margin and clearing, risk management, and rate markets. We also have a special fireside from Zac Prince, CEO of BlockFi.
Day 2: DeFi and New Credit Primitives
Wednesday Nov 18 from 4:30 - 7:00 pm ET
To date, the majority of traditional lending has been focused on applying leverage to trading. However, this is quickly changing as more assets become “tokenized” and take on the attributes of crypto-assets. 2020 has been the year of DeFi. We'll hear from investors and entrepreneurs building new "money legos" and on-chain capital markets. DeFi takes advantage of the unique attributes of cryptocurrencies to create a real-time market for instant pricing and transfer of risk. At its core, credit is the act of buying and selling risk. DeFi markets allow participants to assess the same risk characteristics of traditional credit markets such as duration, collateralization level, and creditworthiness of borrowers, and to price available assets accordingly.
Discussion topics include digital collateral, summer of DeFi, the rise of on-chain credit markets, and insurance and options.
Day 3: Underwriting and New Credit Products
Thursday Nov 19, 4:30 - 7:00 pm ET
While over-collateralized and fully collateralized loans have taken off in every part of the crypto ecosystem, from most regulated to least, from Wall Street to far-flung corners of the internet, our winding path has led us back to the sweet, sweet nectar of risk. Enter under- and un-collateralized lending. As crypto credit markets continue to grow and mature, so do the methodologies for managing and selling risk in the form of credit scoring, underwriting, and more.
In addition, firms are building new investment products and services leveraging these new credit markets, and attracting new types of capital to the industry. Crypto collateralized lending rates are not that much higher than other types of corporate debt, and in some instances, crypto firms can actually access debt at better rates than other types of technology startups. Discussion topics include the evolution of credit scoring, evolving beyond FICO, stablecoins, and delivering yield in a ZIRP environment.