CEO of S’pore-based crypto investment firm Cake DeFi on its new US$100M corporate venture arm

As per a report by Galaxy Digital, venture capitalists (VCs) have invested over US$33 billion into crypto and blockchain startups in 2021. The head of research stated that the figure would likely be even higher in 2022, and as it stands, the prediction seems to be coming true.

Hundreds of millions of funding have already been raised this year by Singaporean startups alone. Adding to the pile, Singapore-based fintech firm Cake DeFi announced the launch of its new venture capital arm in March.

Cake DeFi Ventures has earmarked US$100 million for Web3, gaming, and fintech investments over the next two years. The company is particularly interested in projects linked to NFTs, the metaverse, blockchain, and e-sports.

“By launching Cake DeFi Ventures, we want to bring cryptocurrency and blockchain capabilities to the world. The projects that we invest in can expect to receive strong support while scaling globally,” says Dr. Julian Hosp, co-founder and CEO of Cake DeFi.

What is Cake DeFi?

Cake DeFi was created as an all-in-one platform for people to manage their crypto funds and generate returns through staking, lending, and liquidity mining. Today, it has 600,000 users and manages over US$1 billion worth of assets.

“Our team has deep blockchain and crypto experience,” explains Hosp. “This has allowed us to keep ahead of innovations in blockchain and DeFi technology. We are able to offer a platform through which users can access new DeFi services and applications and in turn, generate long-term value and high returns.”

With the launch of Cake DeFi Ventures, the company is looking for strategic investments which can help enhance and broaden its Web3 offerings.

They are currently in search of startups that possess unique technological and business value propositions, as well as those that can grant them access to a wider Web3 ecosystem.

Through its efforts, Cake DeFi is committed to onboarding to bringing the next wave of people onto the blockchain.

Despite increased cryptocurrency adoption in the last year, the understanding of cryptocurrency and blockchain technology is still at a pretty low level. At Cake DeFi, we hope to actively educate all potential and existing customers to increase the level of education within the crypto space.

Skepticism around DeFi and blockchain technology often stems from a lack of understanding about the space. Users are roped in by the notion of quick money and fail to research their investments.

This, for one, has created a skewed perception around the prevalence of scams in crypto. While bad actors do exist, we often find them grouped together with high-risk investments which never actually promised rewards.

For example, consider those cryptocurrencies that offer four-figure interest rates in exchange for staking. These coins tend to be extremely volatile, and investors need to be aware that their value could soon be negligible.

As such, Cake DeFi is helping users understand the mechanics behind DeFi products so they may make informed decisions. This not only helps investors, but it could also improve the general perception of the crypto space.

How will DeFi continue to grow?

“The early DeFi iterations had to address a lack of users and high network fees, but these challenges are slowly disappearing as the whole DeFi space eventually matures,” explains Hosp.

With all the innovations of the past few years, the space might finally be ready for a mainstream audience.

Over the next five years, as awareness of DeFi increases, it is clear that the mass market audience will rise. Users will be looking for intuitive platforms they are familiar with, similar to the traditional financial institutions.

For Cake DeFi itself, there are two main developments on the horizon: blockchain gaming and the financialisation of NFTs.

“Play-to-earn, GameFi and the Metaverse are not just bold futurist concepts. They have already arrived in our homes and are used by millions of people all around the world,” says Hosp.

“With Facebook’s move to rename itself to Meta, we have already seen a first step into what will follow in the near future: mass adoption led by technology giants.”

Hosp believes that these ideas will continue to proliferate and change the way users interact with each other and with different platforms.

“Platforms will ultimately get even more interconnected and offer more opportunities for users to express themselves by buying, swapping or upgrading in-app items,” he adds.

These considerations have played an important role in determining the focus of Cake DeFi Ventures.

Will DeFi replace traditional finance?

DeFi has grown rapidly over the past year, however, it remains a miniscule sector as compared to traditional finance. Despite being framed as a disruptor, it might not be here to replace banks and equity markets altogether –– at least, not in the near term.

We believe that DeFi and traditional finance go hand-in-hand as crypto, Web3 and the metaverse are starting to pick up around the world.

Hosp believes that DeFi will become an alternative to centrally-governed financial institutions. This could potentially bridge the financial inclusion gap by providing access to the unbanked.

“How these dynamics play out in the future very much depends on the regulatory front,” he adds. “If governments take a path of openness and equality, then DeFi will flourish and revolutionise the archaic banking system.”

Within Singapore, the crypto scene is already flourishing. However, there are still some ways to go. “We believe more can be done in the space,” says Hosp, adding that the level of education and awareness is currently low as the majority of the population still find crypto a foreign and hard-to-grasp concept.

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Featured Image Credit: Cake DeFi