What Is Institutional Blockchain?
Despite the scandals and downturns that marred the blockchain ecosystem last year, institutions are cautious but still see potential in the digital asset space. Massive Wall Street fixtures such as Goldman Sachs, BlackRock, and even the notably blockchain-critical JPMorgan Chase are actively exploring blockchain and new ways to incorporate digital assets into their respective offerings.
"Institutional blockchain projects and companies build products that bridge the gap between traditional finance, tech, and crypto. This could entail gateways for big brands entering Web3 or banks looking to utilize interoperable networks such as Polkadot," says James Wo, Founder and CEO of global blockchain investment fund Digital Finance Group.
Typically, these tools, programs, or platforms grant heightened access and features usually reserved for private use or industries requiring heavy protection. So what are the benefits of using institutional-grade blockchain tools for the average retail investor?
Simply put, it's about attaining the maximum amount of protection, security, and variety that banks and traditional institutions are accustomed to. Whether it is your first time entering crypto or you're a seasoned "HODLer" looking to expand your investment options, the ability to use digital assets in any way you choose should be open to all.
Additionally, as the blockchain industry moves into different sectors and applications, institutional-level products and tools can provide a seal of approval or a confident route to explore new revenue streams. The most venerable and well-respected institutions in any field conduct serious research and development when exploring new technologies or industries, especially before investing resources into them.
Companies and projects that bring institutional developments to wider audiences both help even the playing field and create ways to simplify the more complex facets of blockchain technology. These are our picks for projects that institutions and retail investors should keep an eye on:
Spool: Radically Simplifying DeFi
Spool lets users build seamless DeFi products, bringing tailor-made risk-managed yield portfolios to institutions and retail investors of any size. Through a non-custodial platform, Spool's 5-step "Smart Vault" creation toolbox eliminates the complexity and unclear risk factors that often characterize DeFi by offering a vetted, diverse protocol roster.
DeFi projects are often perceived as being too complicated to navigate, even for some crypto enthusiasts. But they are a clear path forward for investors interested in blockchain transparency and exploring new revenue streams. Spool positions itself as a go-to platform that focuses on accessibility while championing investment diversity, removing time-consuming factors like hunting for the best yields possible that might scare off novice investors.
Spool walks users through each step of creating a diverse DeFi investment portfolio, where institutions and retail investors alike can select each facet of their Smart Vault, such as desired fund allocations, risk appetite, and market exposure. Its comprehensive infrastructure uses familiar financial language and portfolio management options, opening up accessibility for users that are new to decentralized investing.
Spool's advanced customization options and streamlined interface also enable institutions to create DeFi portfolios for themselves, or to white-label their Smart Vault into their own product offering.
Coinbase Institutional: a Familiar Face Entering the Ring
As a long-standing crypto veteran, Coinbase has an established track record for individual investors entering the crypto landscape. It's only natural for the platform to expand into the institutional space, boasting a huge user base and an extensive network of partners.
Coinbase leverages its status as a premier digital asset manager to bring a wide range of tools for institutions looking for a wide array of products. Their institutional track grants access to its exchange, custodial services, flexible staking options, and market data analysis, among other sector-specific features.
While Coinbase's institutional track is better suited for large-scale firms, it offers flexible tools for smaller-scale companies to utilize. However, individual investors sadly do not have access to these same institutional mechanisms for now. That being said, Coinbase still offers an extensive suite of features and applications for retail investors, just without some of the more nuanced and business-oriented applications or oversight.
GK8: Leading the Charge on Self Custody
GK8, the leading institutional-grade digital asset custody platform with DeFi, staking, NFT, trading, and tokenization support, offers both traditional and crypto-native institutions an end-to-end platform for managing blockchain-based assets.
The company developed the world's first true Cold Vault custody solution, built with the highest levels of security. GK8's Cold Vault enables clients to create, sign, and send secure blockchain transactions without internet connectivity, eliminating all cyber attack threats.
Cybersecurity is more important than ever, especially when it comes to the needs of financial institutions that are responsible for billions of dollars in assets. As a regulation-ready solution, GK8's Cold Vault features an insurance policy from USI of up to $1 billion. It offers an unparalleled level of cyber security, leaving no openings for hackers to exploit.
Institutions are already taking notice of GK8's security and custody features, which led to the solution being chosen by Mastercard to help it define the future of blockchain finance and payments. The solution's other clientele includes eToro, Securrency, U.S. Bank, WisdomTree, Tezos Foundation, and Prosegur, one of the world's largest custodians with more than $400 billion in assets under management.
Other uses: Eco-friendly Blockchain
Amid the wider turbulence in the blockchain industry last year, major strides have been made in lowering the industry's environmental impact. Eco-friendly networks, such as Polkadot and now Ethereum, have opened the floodgates to wider audiences that may have avoided crypto due to its poor history of environmental impact.
Likewise, the blockchain creates access to climate projects that were previously unavailable to institutions and retail investors. Companies that are focused on backing impactful initiatives that can serve their corporate social responsibility roadmap can now meaningfully approach the blockchain to find these projects. One such project leading the charge here is Carbon Credit Technology, a climate action that unlocks the carbon credit market to companies and individuals through the blockchain.
"Some institutions might not be ready or interested in entering crypto as a whole, but the blockchain provides new opportunities to get involved with environmental initiatives that help reduce a company's carbon footprint," says Zhi Li, CEO of Carbon Credit Technology. "There are plenty of blockchain platforms that operate in a climate-neutral manner or unlock access to compliant and voluntary carbon markets, and the possibilities are only growing."
Overall, institutions may have temporarily shied away from going full force into the blockchain. But the steady uptick in interest in the blockchain's bounty of applications and use cases shows that there is still a very optimistic future ahead for the industry as a whole.
