Much has been played about the influx of institutional investors and high net worth individuals (HNWIs) into crypto during the last crypto boom.
But for the most part, those investors focused on Bitcointhe mainstream crypto asset – if any cryptocurrency can be called mainstream at all.
Now institutional investors are turning their attention to more sophisticated crypto assets and applications, such as: B. the possibilities of decentralized financing (DeFi). In late 2021, Brett Tejpaul, head of institutional sales at crypto exchange Coinbase, hailed the “aha moment for institutions,” adding, “One thing I want to say, it’s not just about Bitcoin.”
“There is definitely an increase in activity in the DeFi sector,” Tavia Wong, director of marketing and business development at institutional crypto custody platform Cobo, told Decrypt as “institutional investors are shifting to activities that emphasize their investment advantage.”
Singapore-based Cobo develops and implements tools and infrastructure to help these investors capitalize on the long-term opportunities of crypto and DeFi, offering a range of SaaS-like services to make institutions and high net worth individuals (HNWI) easy and safely help invest in decentralized finance products.
And despite the crypto crash of 2022, the appetite for DeFi among institutional investors is “very still there,” Changhao Jiang, CTO and co-founder of Cobo, told Decrypt. But after the collapse of high-profile DeFi projects like Terra, “they have a better understanding of the risks,” he said. “You are more rational than before.”
Being more careful — going in with both eyes open — isn’t a bad thing, Jiang said. Institutional investors might be cautious, he added, but they’re still willing to explore DeFi — and look for tools to help them navigate the complexities of immersing themselves in DeFi.
“It helps to align with tools and companies that aren’t focused on things like small price changes in the short term,” Jiang said.
Fulfillment of institutional requirements
Institutional investors have three main needs — essential boxes that need to be ticked — before they can take the plunge into DeFi: security, compliance, and ease of use.
“We permit [institutional investors] to test their curiosity with minimal risk.”
– Lily Z. King
Although most institutional investors “look at DeFi as a high-yield solution and are still very curious,” said Lily Z. King, Cobo’s chief operating officer. “Following this recent market slump, they have recognized that there are unique internal and external risks associated with this space.”
“What we allow them is to test their curiosity with minimal risk,” she said.
Argus never sleeps
To facilitate this, Cobo launched Cobo Argus, a platform that complements institutions’ internal control frameworks and provides a secure custody architecture for crypto assets.
Named after a hundred-eyed giant from Greek mythology, Argus is said to be a vigilant guardian for institutional investors. It supports teams working across all sectors of the new crypto economy including DeFi, NFTsdecentralized autonomous organizations (DAOs), GameFi and SocialFi.
Argus is a smart contract-based custody tool that combines internal control risk management, automation and pre-set rules to allow multisig wallets for institutions to operate securely and effectively. The role-based delegation system separates access controls to reduce the risk of internal error, negligence or even fraud.
A bird’s eye view
The core functionality of the platform is to provide role-based access controls for invoking smart contracts. For DeFi teams, this means owners can pre-define which DeFi protocols their operators can interact with, essentially creating whitelists that prevent fraud or negligence within the organization and the associated losses.
Argus can not only assign traders access to specific whitelist protocols, but also limit the actions traders can take. For example, one trader may be allowed to add or remove liquidity while another is able to move and swap funds.
“Security and flexibility mean you can scale your organization with confidence.”
– Tavia Wong
Owners can also set detailed trading rules on the platform, such as: B. Setting trading parameter thresholds and allowed trading pairs for each operator/trader, allowing for complete control and a powerful bird’s-eye view of their entire operation.
It’s all customizable and can be written in smart contracts from the start.
“The point here is to have strong security in place, so you know who in your organization has access to what logs, what activities they can do, and you can systematically monitor all of that,” Wong said. “This security and flexibility means you can scale your organization with confidence.”
Optimization of multisig wallets
For institutions, scaling brings complications when it comes to crypto, such as: B. the need to manage multisig wallets – digital wallets shared by more than one person. They create headaches for institutions because multiple owners need to approve each and every trade, and teams are often large and located across borders and in different time zones.
But having to manually approve each transaction is beyond inefficient — it’s an operational risk, Wong said. Imagine having to approve hundreds of transactions every day. “At a certain point you get tired,” she said, “and you’re probably not going to properly review those transactions.”
Cobo Argus streamlines the process of using multisig wallets by allowing certain predefined transactions to be automatically approved. For example, certain recurring or lower-value transactions can be approved without requiring all owners to tediously sign off, greatly improving workflow efficiency without compromising security.
It integrates with the industry-leading multisig wallet Gnosis Safe and is whitelisted in its secure apps. In a statement, Gnosis Safe noted the “great synergies with our partnership with Cobo,” adding that “their Argus product can help solve many institutional smart contract invocation workflow needs.”
A wealth of additional services are also available within the platform to support institutions on their DeFi investment journey, including on-chain address analysis, anomaly detection, automatic deleveraging, and security incident monitoring across the crypto community.
chain of command
As the crypto market evolves, institutional investors are showing a growing level of crypto literacy and maturity.
And while Cobo started as a crypto custodian – and quickly became the largest in Asia – it also reflects the evolving needs of the crypto industry, expanding its offering with a flexible platform that meets the needs of increasingly crypto-native teams.
With the support of Cobo Argus for smart contract-based custody, Cobo is currently the only company with a software-as-a-service (SaaS)-based tool for cross-team smart contract invocation that both defines user hierarchies and implements access controls can separate tasks.
And Cobo continues to evolve its offering to meet the needs of the crypto pioneers who are building the decentralized institutions of tomorrow. For the institutional investors of tomorrow, Cobo has a larger overarching vision to support more than just centralized or even smart contract based solutions. It is working on developing a dedicated blockchain-based custody product, Cobo Chain, that will support interoperability and communication between multiple blockchains.
“We realized that a dedicated blockchain is really necessary to simplify and unify access to different blockchains,” Jiang said.
Cobo’s move from depot wallets to Argus and allowing teams to collaborate on behalf of security without sacrificing efficiency is the next step toward Cobo Chain, Jiang said.
“We realized that there is a real need for a dedicated blockchain to simplify and unify access across different blockchains.”
– Changhao Jiang
“This is a dedicated blockchain that can support cross-chain and cross-layer wealth management,” Jiang said. “We’re doing this because we see this is the future and the inevitable demand will be.
Sponsored post by cobo
This sponsored article was created by Decrypt Studio. Learn more about the partnership with Decrypt Studio.
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