Clearpool partners with Hex Trust to deliver a decentralized capital markets ecosystem
Clearpool is thrilled to announce a partnership with Hex Trust, Asia’s leading digital asset custodian. As part of the partnership, Hex Trust will incubate Clearpool, provide custody services to their participants as well as compliance services, such as KYC, identity verification and transaction monitoring services.
Clearpool is building a decentralized capital markets ecosystem where institutional borrowers can access crypto assets without the need for overcollaterization. Under this partnership, Clearpool will benefit from Hex Trust’s expertise to design tailored custody solutions and compliance services to equip lenders with advanced tools allowing them to mitigate counterparty risks.
Digital asset institutions such as crypto hedge funds, market makers, and trading desks, do not have the same access to capital as their traditional counterparts. Traditional lending institutions do not typically lend to crypto institutions, leading them to seek alternative methods of funding in DeFi and CeFi markets. These alternatives, whilst being novel in design, also present novel problems, mainly in the form of over-collateralization and risk of liquidation from a borrower’s perspective, whilst default risks remain from a lender’s perspective.
DeFi keeps evolving with new technologies and protocols allowing traders to access a wide range of trading tools and software ranging from flash loans to unlimited leverage. Although this space offers outsized opportunities, institutional borrowers are limited in their access to digital asset loans. In their most popular form today, crypto-backed loans, not available in traditional finance, require overcollateralization on the blockchain — a situation that exposes borrowers and lenders respectively at higher risks of liquidation and default.
Clearpool is solving the overcollaterization issues that digital asset institutions such as traders or crypto hedge funds face, by introducing single borrower liquidity pools and tokenized credit. The protocol will provide more transparency to its lenders and give them access to a credit score attributed to institutional borrowers after they have completed a strict KYC and before being granted loans at a lower collateralization rate.
While credit scores are a standard in traditional finance, they have yet to be introduced in the digital assets space. Through Clearpool’s credit scores mechanism, liquidity providers (LPs) could better monitor, manage and hedge risks associated with credits without compromising the high returns and rewards enabled by DeFi protocols.
Overcollaterization is a problem well known by Hex Trust which manages over 100 institutional clients including banks, financial institutions, exchanges, investment funds, corporations and digital asset projects.
About Hex Trust
Hex Trust is fully licensed, insured and Asia’s leading digital asset custodian. Led by veteran banking technologists and award-winning financial services experts, Hex Trust has built a proprietary bank-grade platform — Hex Safe™ — that delivers a custody solution for banks, financial institutions, asset managers, exchanges, and corporations. Through Hex Safe™, clients can access liquidity providers, exchanges and lending & staking platforms, enabling seamless access to services while assets are held in our highly secure and regulated platform. In Hong Kong, Hex Trust is registered as a Trust Company under the Hong Kong Trust Ordinance and holds a Trust or Company Service Provider (TCSP) license under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance. In Singapore, Hex Trust holds a Capital Markets Services (CMS) license from the Monetary Authority of Singapore (MAS) allowing the company to provide custodial services regulated under Singapore’s Securities and Futures Act.
Clearpool is a decentralized capital markets ecosystem, where institutions can borrow uncollateralized liquidity and LPs get attractive rewards and risk management solutions. Clearpool introduces several new concepts to DeFi, with the concept of single borrower liquidity pools and tokenized credit giving rise to sophisticated risk management and hedging solutions. Clearpool is revolutionizing debt capital markets; a paradigm shift in how institutions borrow uncollateralized liquidity is upon us.