THE INSTITUTIONAL LIQUIDITY PROBLEM IN DEFI:

 

Decentralized Finance (DeFi) has emerged as a promising alternative to traditional finance by continuously developing innovative financial products and services with increased levels of security and transparency accessible to a broad audience. However, the ecosystem continues to face challenges when it comes to attracting and onboarding institutional liquidity. These obstacles are highlighted by issues relating to DeFi’s limited access to a wide range of non-digitally native assets and its lack of institutional-quality governance along with the regulatory uncertainty that exists in the landscape today.

 

THE OPPORTUNITY:

 

Founded by a group of ex-leaders from MakerDAO and from the financial industry, M^ZERO Labs aims to address these challenges by building the financial infrastructure that will allow institutional liquidity and asset providers to interact in an on-chain manner. This solution will be housed in a  censorship-resistant environment that will be overseen and managed by fully-decentralized institutional-quality governance. Furthermore, the protocol’s first use-case will be M^ZERO’s native token, a permissionless stablecoin backed by distributed US short-term government debt. 

 

“What Visa, Mastercard and American Express have done for payments, M^ZERO wants to do to value distribution,” said Paul Veradittakit, Managing Partner at Pantera Capital, “It will be an open-source, credibly neutral protocol where providers of liquidity and collateral can freely meet in a decentralized market on blockchain rails.”

 

Institutional Liquidity: Protocols have struggled to attract large institutional players due to concerns around security, compliance, and regulatory uncertainty. M^ZERO aims to address this issue by creating a hub-and-spoke model, where their platform would be the neutral engine facilitating the distribution of value and liquidity, while regulated bridges (the spokes) would connect to it in compliance with their own regulatory requirements. 

 

Institutional-Quality Governance: While many protocols have struggled with governance due to the lack of a clear decision-making process and the potential for major stakeholders to dominate decision-making, M^ZERO’s solution is to create a decentralized consortium that can permission which asset providers and liquidity providers can connect to the protocol, creating a more democratic and decisive decision-making process.

 

WHY WE’RE PARTNERING IN M^ZERO:

 

M^ZERO’s goal of becoming the first financial infrastructure designed to allow institutional liquidity and asset providers to interact on-chain is ambitious, and their seasoned team and innovative approach make them an exciting addition to the Pantera portfolio.

 

M^ZERO’s founding members have years of experience in the areas of stablecoin and crypto governance design, as well as traditional finance and securitization services. The team includes Greg Di Prisco as Lead Architect, Oliver Schimek as COO, and Luca Prosperi as CEO. They will lead a group of engineering, structuring, and regulatory professionals to bring the M^Zero vision to life. Greg Di Prisco was formerly the Head of Business at Maker and founder of RWA Co. and Distributed Capital, and has worked as a trader and economist. Oliver Schimek was previously the founder and CEO of CrossLend, a European securitization expert, and an approved MD with 15 years of experience in fintech. Luca Prosperi was a core team member at MakerDAO, senior finance professional for 15 years, and has a well-known following through his analysis at dirt roads.substack.com.

 

Our view is that M^ZERO’s creation of an open-source, credibly neutral protocol where providers of liquidity and collateral can freely meet in a decentralized market on blockchain rails will do for value distribution what Visa, Mastercard, American Express, SEPA and Euroclear did for payments and securities settlements in traditional finance.

 

For these reasons and many more, we are proud to lead M^ZERO’s funding alongside Road Capital Management, AirTree, Standard Crypto, The SALT Fund, ParaFi, and other top-tier partners.