DeFi Technologies, a Toronto-based blockchain company, has significantly expanded its footprint in the decentralized finance (DeFi) space by launching a validator node on the Core Chain. This move involves staking approximately $100 million in Bitcoin (BTC), a bold strategy aimed at integrating traditional finance with cutting-edge blockchain technology.
The validator node will operate under DeFi Technologies’ subsidiary, Valour, which will manage the staking process and validate transactions on the Core Chain. This venture is set to provide substantial rewards for DeFi Technologies through transaction validation and staking returns.
Staking and Core Chain’s Unique Mechanism
Staking on the Core Chain is powered by its Ethereum Virtual Machine (EVM)-compatible consensus mechanism, which runs on a layer-1 blockchain supported by Bitcoin. This compatibility allows Core Chain to leverage the security and robustness of Bitcoin while providing the flexibility and functionality of the Ethereum network.
- EVM-Compatible: Enables integration with Ethereum-based applications and smart contracts.
- BTC-Powered Blockchain: Combines Bitcoin’s security with Ethereum’s smart contract capabilities.
- Custody and Rewards: Stakers maintain control over their BTC and earn rewards in CORE tokens, which are automatically reinvested to enhance yield.
- Reward Rate: Staked CORE tokens offer a return of 11.66%.
According to Olivier Roussy Newton, CEO of DeFi Technologies, this initiative is aligned with the company’s mission to bridge the gap between traditional finance and blockchain innovation. He stated, “We are advancing our mission to bridge traditional finance with innovative blockchain technology. This approach offers our investors unique exposure to yield and growth within the digital asset space.”
Security and Distribution of Mining Power
Security is a paramount concern for blockchain networks. Core Chain addresses this by distributing 50% of Bitcoin mining hash power directly to the blockchain. This robust security measure ensures that the network remains resilient against potential threats.
Before DeFi Technologies’ substantial stake, Core Chain already had over 2,800 BTC staked, underscoring its strong position in the crypto staking arena.
This initiative is the second major collaboration between DeFi Technologies and Core Chain. On May 10, they launched the Valour Bitcoin Staking exchange-traded product (ETP) on the Nordic Growth Market exchange. This product, using the Swedish krona as the base currency, is touted as the first yield-bearing Bitcoin ETP. It offers investors BTC exposure with a 5.65% yield and a 1.9% management fee.
| ETP Feature | Details |
|---|---|
| Yield | 5.65% |
| Management Fee | 1.9% |
| Base Currency | Swedish Krona |
| Launch Date | May 10, 2023 |
| Market | Nordic Growth Market |
In addition to the Bitcoin ETP, DeFi Technologies and Core Chain plan to launch a Core ETP. This new product will leverage BTC staking to generate yields, further expanding the range of investment opportunities available to their clients.
Valour, the DeFi Technologies subsidiary, offers a diverse range of exchange-traded products (ETPs) backed by various cryptocurrencies. These include popular assets like Uniswap and Polkadot, as well as a 10-coin basket, Bitcoin Carbon Neutral (BTCN), and the STOXX Bitcoin Suisse Digital Asset Blue Chip X Index. Notably, some of these ETPs are offered with no management fee, making them particularly attractive to investors seeking cost-effective exposure to the digital asset market.
- Single-Coin ETPs: Includes assets like Uniswap and Polkadot.
- Multi-Coin ETPs: Features products like the 10-coin basket.
- Specialty ETPs: Includes Bitcoin Carbon Neutral (BTCN) and the STOXX Bitcoin Suisse Digital Asset Blue Chip X Index.
- Management Fees: Some ETPs are offered with no management fee, enhancing their appeal.
DeFi Technologies’ Strategic Focus on Bitcoin
In a strategic pivot towards Bitcoin, DeFi Technologies announced on June 10 that it had adopted BTC as its primary treasury reserve asset. As part of this strategy, the company purchased 110 BTC. This decision aligns with their broader strategy to increase their dependence on Bitcoin and capitalize on its long-term value potential. This move was well-received by the market, leading to a 23% surge in DeFi Technologies’ share price following the announcement.
As of May 31, DeFi Technologies reported a cash balance of $51 million. Its subsidiary, Valour, demonstrated significant growth with $607 million in assets under management (AUM). This is a remarkable increase from mid-March 2022, when Valour’s AUM stood at $274 million, reflecting a robust upward trajectory in their financial performance.
| Date | DeFi Technologies Cash Balance | Valour AUM |
|---|---|---|
| May 31, 2024 | $51 million | $607 million |
| March 2022 | N/A | $274 million |
DeFi Technologies’ launch of a validator node on the Core Chain and the staking of nearly $100 million in Bitcoin marks a significant milestone in its strategic evolution. By integrating traditional finance with innovative blockchain solutions, the company is positioning itself at the forefront of the DeFi space. With its diverse ETP offerings and a strong focus on Bitcoin, DeFi Technologies continues to expand its influence and provide unique opportunities for investors in the digital asset market.
