It appears that the crypto lending industry is fully ripe and now booming, as transactions seem to be surging on multiple fronts. One of the top players of the industry, Genesis reports its financial results for 2020’s third quarter, and it showed some very impressive fundamentals. According to the numbers shared by the company, new loans issued by Genesis in the third quarter of the year amounted to $5.2 billion. This haul was more than double of the previous one, as in the second quarter of the year, its new loans had been around $2.2 billion.
The company had launched its lending business back in 2018 and since then, Genesis has issued loans more than $13.5 billion. Other than total loans, there had also been an increase is active loans by nearly 50% in the quarter, as they reached the $2.1 billion mark. Talking about its performance, Genesis revealed that the increase in loan numbers was mostly because of growth in cash loan and altcoin issuance. The company also said that it had experienced a ‘modest’ growth in the loan value of outstanding crypto. The firm disclosed that the monthly interest payout in total for the month of September was 20% of all the interest that had been paid in the last 12 month period.
Genesis also stated that growth in bank deposits was also a reason behind the boost. It said that banks had had to issue loans somewhere and the best place for deploying excess capital during a pandemic is none other than prime brokerages. It said that such clients had worked with Genesis before and are now lending both excess BTC and USD that’s generated from the CME basis trade. However, it should be noted that the growth in Genesis was particularly because of a boost seen in altcoins and the dollar.
According to the results, in the second quarter, the crypto lending company’s share of Bitcoin as a percentage of outstanding loans had declined from 50.5% to 40.8%. As a matter of fact, the company revealed that its major growth driver had been the decentralized finance (De-Fi) space. It elaborated that a number of its trading counterparties had started to actively borrow stablecoins, along with Ether for the primary purpose of liquidity. One of the largest drivers of the sub-industry is none other than De-Fi lending, as protocols have managed to attract liquidity worth billions of dollars because they are able to generate huge returns.
However, the volatility of the industry, combined with its nascent nature, could also be a threat to the long-term potential of De-Fi. Some of the top players in the industry have already ventured into fixed-rate lending, such as Yield Protocol, Mainframe, and UMA Protocol. A researcher at the Messari, Jack Purdy, explained that improved certainly levels were a benefit only fixed-rate lending can provide to the lenders and borrowers, who wish to make accurate forecasts of their costs and returns. As more protocols are interested in offering fixed rates, the lending industry may experience a slowdown.