Investors interested in crypto have been amazed by some of the gains cryptocurrencies and companies in the industry have posted over a short period of time. Companies like Silvergate Capital (NYSE:SI) and Voyager Digital rose 700% and 1800% respectively since last December.
What are the next potential under the radar crypto stocks that could provide early investors with returns like these? Investing in many of these early stage companies is risky and shares will endure high volatility, but it is worth exploring for risk-tolerant investors as part of a well-diversified portfolio. One example is DeFi Technologies (OTC:DEFT.F), which I would compare to an early stage Silvergate.
DeFi Technologies is a digital asset investment firm focused on decentralized finance. It trades over the counter in the United States (meaning it is not listed on a major exchange like the NYSE or the NASDAQ), on the NEO exchange in Canada, and on the Frankfurt Exchange in Germany.
What is the value proposition here?
DeFi Technologies’ value proposition boils down to this: It makes DeFi protocols (think Polkadot (CRYPTO: DOT), Cardano (CRYPTO: ADA), and Uniswap (CRYPTO: UNI)) more accessible to everyday investors who may not be crypto natives. Many investors don’t know what DeFi assets to follow or invest in and, and as the company points out, “the process of buying into a Defi asset requires a steep learning curve. Having a wallet and having to fund a separate crypto account is foreign and intimidating to the average investor.” By listing a suite of DeFi exchange-traded products (ETPs), the company is essentially making investing in a DeFi asset like Uniswap more like buying a stock or an ETF. The company makes the process of investing in these assets easier and more accessible for investors that want exposure to this emerging sector but do not yet feel comfortable creating their own crypto wallet or participating in a decentralized exchange (DEX).
Here’s how it works. DeFi Technologies provides the convenience of investing through a normal brokerage account, which means investors don’t have to set up dedicated crypto wallets, maintain private keys, or deal with the risk of getting hacked. DeFi Technologies compares this to wrapping Defi protocols in ‘equity wrappers’ so that investors can buy DeFi protocols in an easy and intuitive way. Opinions on the difficulty or inconvenience of setting up a wallet or holding a private key will vary based on the individual, but many new crypto investors will still appreciate the easy access. For example, if I am interested in Solana but don’t want to set up a dedicated wallet or an account with a crypto brokerage, I can buy DEFTF’s Solana ETP, which owns Solana as an underlying asset through a standard brokerage account.
How does DeFi Technologies make money?
DeFi Technologies makes money in three ways: management fees from its ETPs, its venture portfolio…
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