Crypto custodian Copper is looking to connect institutions to the emergent world of decentralized finance (DeFi) with a newly unveiled product.
Announced Friday, CopperConnect is a bridge between Copper’s existing storage services and DeFi apps. In a press release for the new tool, Copper claims DeFi risks have been decreasing, making the speculative field more appealing to institutional clients.
“In the past, the DeFi space was viewed as too volatile for many crypto funds. However, over recent months, the number of unaudited DeFi projects (i.e. projects where their smart contracts have not been security checked by third-party experts) have decreased, and fluctuations in value of DeFi markets have become less dramatic,” Copper said.
However, decentralized money market Aave’s CEO, Stani Kulechov, said there has been “a significant increase in the number of institutions looking to deposit liquidity onto our project,” in the press release.
No institutional client is named or quoted in the press release that may have expressed DeFi-curiosity to Copper. The startup did not respond to a CoinDesk request for comment by press time.
Copper’s new financial plumbing provides a way to “comply with [institutions’] exacting risk management rules,” Kulechov continued.
CopperConnect is an infrastructure system that provides security throughout the custody, transfer and lock-up process, as an asset makes its way to a DeFi smart contract. The Google Chrome application, or browser extension, reportedly works to connect Copper’s multi-party computation (MPC) custody system to both centralized exchanges and DeFi apps.
When exiting a DeFi pool, assets can only be returned to the wallet from which they came, according to Copper. It is unclear whether the service is functional with all DeFi applications.
Aave’s Kulechov said the system eliminates nearly all operational risks. Katrina Daminova, Copper’s head of product, suggested it also adds efficiency.
In September, crypto firm Trustology revealed a “DeFi Firewall” to its suite of institutional investment tools, also meant to bridge the gap between traditional and decentralized finance. While, Curv, another crypto custodian, now provides institutions access to leading DeFi protocol Compound.
In February, Copper raised $8 million in fresh capital with plans of expanding into new markets. “Since 2017, we have seen many crypto custody solutions emerge that don’t fully meet the needs of institutions,” Copper CEO Dmitry Tokarev said at the time. “Instead, they have built for an institutional framework that doesn’t exist yet, and is unlikely ever to, leaving institutions discouraged.”