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Uniswap Labs partnership brings institutional access to DeFi

source-logo  blockworks.co 30 November 2023 13:37, UTC

The team behind popular decentralized exchange Uniswap has partnered with Talos, an institutional investing technology firm, to bring decentralized finance (DeFi) liquidity to institutional traders.

Uniswap Labs will be providing its Trading APIs to Talos clients in a familiar Talos order book format. There are also plans to enable Talos clients to use the UniswapX ecosystem in the near future. Institutional access to Uniswap will be supported by Fireblocks, a platform designed to store, move, and issue digital assets.

This latest partnership exemplifies growing institutional interest in crypto assets, driven primarily by the need for market depth and breadth, Roland Jarquio, the vice president of growth and product marketing at Talos told Blockworks.

“Some institutional investors are looking for exposure to certain protocols and projects that can only be traded on DEXs like Uniswap,” Jarquio said. Others, Jarquio notes, are looking to trade at a scale and need deeper liquidity in assets such as ether (ETH).

Why are institutions interested in DeFi?

Following Ethereum’s Shapella upgrade earlier this year, many institutions have started to make moves in the DeFi space.

Generally speaking, DeFi lending protocols offer higher yields than many traditional financial opportunities.

Liquid staking, for example, allows institutional investors to deposit assets into a proof-of-stake protocol while retaining a token with which they can generate additional yield by providing market-making liquidity. The result is higher-yield-bearing portfolios than they could construct in traditional financial markets.

A recent report further shows that for certain trading pairs, AMMs such as Uniswap v3 have proven to have deeper liquidity than centralized exchanges. The report highlights that:

  • For ETH/USD, Uniswap has ~2x more liquidity than both Binance and Coinbase.
  • For ETH/BTC, Uniswap has ~3x more liquidity than Binance and ~4.5x more liquidity than Coinbase.
  • For ETH/mid-cap pairs, Uniswap has, on average, ~3x more liquidity than major centralized exchanges.

Tokenized real-world assets are also gaining traction, with DeFi protocols having facilitated over $4.5 billion in private credit across the globe.

Jarquio notes that it is “hard to say” what the growing interest from institutional investors in the DeFi sector could imply, but for its institutional clients, this partnership gives them an additional source of liquidity.