Decentralized finance—DeFi—refers to the shift from traditional, centralized financial systems to peer-to-peer finance enabled by the Ethereum blockchain. In 2021, the DeFi ecosystem grew by over 20x. It has attracted millions of users and many of the world’s leading financial institutions, funds, exchanges, and family offices, with yields that far outweigh those in traditional finance.

This year has seen significant traction from decentralized versions of lending and borrowing platforms, prediction markets, margin trading, payments products, insurance, and more. Notable traction has also been evident across entirely new forms of investment, such as staking and yield farming. The DeFi ecosystem now represents an expansive network of integrated protocols and financial instruments worth more than $60 billion.

The Checklist

We compiled the following checklist that summarizes 4 key steps to prepare crypto funds, family offices, and financial institutions to access and engage in DeFi.

1. Consider strategically how much capital your fund is willing to allocate to DeFi exploration.

2. Start learning through experimentation by using MetaMask. Make trades without investing too much into infrastructure and processes until your fund consolidates a DeFi investment strategy. Here are some ideas:

* Learn more about these activities on our prior article: The Rise of Institutional Opportunities in DeFi

3. Set up infrastructure and processes to manage digital assets

  • Research and analysis

  • Key storage and asset custody

  • Compliance

  • User permissions

  • Trade execution

  • Reporting

  • Monitoring

*MetaMask Institutional helps facilitate many of these services. Learn how MetaMask Institutional delivers what institutional investors need to participate in DeFi.

4. Select technology providers and vendors your fund will work with for various DeFi activities e.g. Choose a staking-as-a-service provider with high standards of reliability and performance, such as Codefi Staking

DeFi with Consensys

Consensys helps converge traditional finance with Ethereum-based DeFi technology to power the future of commerce and finance. Our products, as the primary entry points to Ethereum, make DeFi accessible and productive for institutions.

  • MetaMask, the most trusted DeFi wallet, counts over 10M monthly active users. It boasts unrivaled access to the DeFi ecosystem because all dapps build to integrate with MetaMask. Its business-focused arm, MetaMask Institutional, enables institutional investors to securely and efficiently deploy capital into DeFi. Through MetaMask Institutional, institutions can implement investment strategies for trading, lending, yield farming, and more.

  • Codefi Staking enables institutions to capitalize on the revenue opportunity of staking on Ethereum without the technical and operational complexities of running an independent validator. By staking ETH, institutions can generate yield in return for maintaining the security of the network.

  • Codefi Activate enables institutions to earn rewards for participation in DeFi protocol growth and governance. Institutions can get in on the ground floor of the most innovative DeFi projects and help grow the network.

With these products, institutions can implement DeFi investment strategies, earn Ethereum staking rewards, and engage with the cutting edge of DeFi innovation. At Consensys, we work to empower institutions with the tools, infrastructure, and services to interact with DeFi.

DeFi for Institutions

Institutional opportunities within DeFi don’t stop here. This is a chapter from Consensys’ ‘DeFi for Institutions’ report. Download the full report to learn more about…

  • The surge in institutional adoption of blockchain and digital assets

  • The rise of institutional opportunities in DeFi

  • The challenges of institutional engagement in DeFi

  • Different ways institutions can get started accessing, investing, and participating in DeFi

Download full report