Ethereum and DeFi, not Bitcoin, boost Genesis lending

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Ethereum and Decentralized Finance (DeFi) tokens are pushing Genesis Capital’s lending business to new heights, according to the company’s “Q2 Market Observations” report released Wednesday.

Genesis, which is owned by Digital Currency Group, the parent company of CoinDesk, has indicated that bitcoin’s role is changing in the bear market. From the end of 2020 to the end of the second quarter, Genesis saw bitcoin’s dominance in market capitalization drop from over 70% to under 45%, while major Ether and DeFi tokens doubled in value for this period.

According to the Genesis report, bitcoin made up 42% of the company’s loan portfolio in the second quarter – a drop of 12 percentage points from the end of 2020 – and bitcoin spot trading has fallen to 47%. in the second quarter compared to highs of 80.% in the fourth quarter of last year.

As DeFi grows and attracts the attention of institutional investors, the demand for ether is also increasing. Hedge funds are increasingly looking to Genesis and other lenders to borrow ETH to deploy in DeFi protocols.

This trend was evident in the second quarter, when the company had $ 25 billion in new start-ups, its biggest ever in a quarter. The figure has increased eightfold from the previous year. The cumulative original value of the company is now $ 66 billion since its launch in 2018.

The report also attempts to explain the crypto market crash this spring, which saw bitcoin drop from nearly $ 65,000 in April to $ 35,000 at the end of the first quarter. Tweets from Tesla CEO Elon Musk that the automaker will no longer accept bitcoin as a payment method, concerns about the impact of bitcoin mining on the environment, a “dangerously exploited market”, a regulatory review, “string of negative headlines” and crackdown on crypto miners in China have all been cited as triggering a “cascade of liquidations and depleted backlog offers.”

The Genesis report also contemplates technology upgrades, including Bitcoin’s upcoming Taproot activation and EIP 1559, which will change how Ethereum fees work. It also highlights the development of Layer 2 scaling products like Optimism and Arbitrum in the DeFi industry.

“Advances on industry fundamentals combined with growing interest from traditional market players will continue to drive the industry forward,” the report concludes.


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