Traders are looking for yield, profiting at one of the largest trading and lending stores in the crypto industry.
According to a second quarter review of Genesis Global Trading’s lending activities, the total number of loans outstanding reached $ 1.4 billion in the second quarter, an increase of 118% quarter over quarter. It added more than $ 2.2 billion in new creations, an increase of 324% from the same quarter last year.
Since the company’s launch, Genesis has generated more than $ 8.4 billion in crypto loans.
In a statement to The Block, CEO Michael Moro said he was comfortable with the growth of the company, noting:
âThe growth of our business is driven by many factors, not the least of which is our risk framework. As long as the business grows within our existing risk framework, I’m very comfortable with that. “
Still, much of the quarter-over-quarter growth is the result of March’s pullback at the end of the first quarter, according to Moro.
âUnless crypto prices increase significantly, I don’t expect near 120% growth in QoQ in the future,â he said.
On the spot trading front, Genesis traded $ 5.2 billion worth of crypto in the second quarter. Meanwhile, its new derivatives office posted volume of $ 400 million in June.
Traders looking for new yield opportunities have supported this growth, Genesis said in the report.
âA major theme in the second quarter was demand for yield on crypto assets,â the report says. “Yield is boosting the crypto and other asset class markets, but the past three months seemed specifically focused on yield.”
The second quarter was largely characterized by low volatility, forcing traders to look for new profit opportunities, as The Block previously reported. For Genesis, this has resulted in traders committing to their business to execute three main return strategies.
“The three most prevalent forms of yield generation are cash loans, call rewriting and, more recently, cash extraction,” according to the report.
To further capitalize on opportunities for cash extraction or yield farming, hedge funds would borrow additional tokens and then deposit on platforms like Compound to earn a yield. Traders quickly moved between different tokens, according to Genesis chief derivatives officer Joshua Lim.
âThe demand for borrowing assets that have the most favorable fee structures increases when the market is warm and decreases rapidly once the market is on the next asset,â the company said. âIn the beginning, we saw interest in BAT and REP soar after these compound markets paid high fees. Over time, we saw demand normalize mainly to stablecoins like USDT, USDC and DAI because they are easier to find and still very profitable to grow.
These changes can take one to two weeks, according to Lim.
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