Nomura's Laser Digital invests in DeFi protocol Infinity Exchange

Laser Digital, the crypto subsidiary of Japanese financial services giant Nomura, invested in Infinity Exchange, a decentralized finance (DeFi) protocol for institutional lending and borrowing.

Laser's investment is additional to the $4.2 million seed round Infinity raised last September from several backers, including GSR and Flow Traders, Infinity founder and CEO Kevin Lepsoe told The Block. He declined to comment on valuation and whether the fundings were secured via equity or token rounds.

Lepsoe, a former head of structuring and financial engineering at Morgan Stanley in Hong Kong, founded Infinity last year, aiming to increase institutional adoption of DeFi. Infinity is built on Ethereum and providers users access to both floating and fixed interest rates, as well as the trading of interest rates, Lepsoe said.

Explaining how Infinity differs from existing DeFi protocols, Lepsoe said its interest rate mechanism and risk management system are key competitive advantages.

"For example, on Compound, a lender would receive 0.03%, while a borrower would pay 2.86% on WBTC. As compared, on Infinity, lenders and borrowers would pay and receive the same interest rate (1.5%, as an example), excluding fees, whereby the lender would receive 1.47% 'more' and the borrower would pay 1.36% 'less' by using Infinity, as compared with the Compound (current) rates mentioned above," he said.

Risk management

As for Infinity's risk management system, Lepsoe said the protocol manages both ERC20 and ERC721 tokens as collateral.

"A user could deposit USDC with Aave and receive aUSDC, transfer this aUSDC to Infinity, and borrow against this as collateral," he said. "In effect, Infinity's risk management system provides a venue of external liquidity in deposit and LP [liquidity provider] tokens, which otherwise would have a limited (if any) external avenue of liquidity."

The Infinity protocol is currently live on the Goerli testnet and the mainnet is expected to launch by the end of the second quarter, according to Lepsoe. To that end, Infinity plans to continue building and is looking to increase its current team of 12 people.

Olivier Dang, head of ventures at Laser Digital, told The Block that Infinity is building infrastructure for institutional adoption of web3, and that's a key reason why Laser backed the project.

Besides Infinity, Nomura and Laser have invested in four crypto firms: Komainu, Bullish, Allinfra and Orderly Network. "We have three more investments in crypto companies that will be made public in the near term," Dang said.