Our initial founding principle was to digitize and tokenize private capital markets, and thus we built decentralized infrastructure to modernise fundraising and workflows, whilst bringing the potential of tokenization and the blockchain to the industry. We aimed to bring the kind of automation and digitisation found in public markets that are sorely missed in the private market, despite the private market being more than three times bigger and growing twice as fast. Our initial solution, VDeal, allows financial institutions to transform their business by making their transaction processes and workflows 100% digital, tokenizing their assets on the Corda blockchain.
On top of this, our platform connects clients to a wider ecosystem of financial institutions as well as innovative DeFi products, liquidity, and portfolio management solutions. Today VALK is used by more than 90 investment banks, hedge funds, asset managers, family offices, fund managers and individual private companies (large, SME, start-ups) in more than 20 countries across Europe, the Middle East, Africa, North America, and South America. VALK has supported more than $4bn worth of deals in the last year and is integrated with the main DeFi protocols.
Additionally, during these two years of growth, we noticed that digital assets are maturing and getting more recognition in the traditional finance (TradFi) industry. Digital exchanges (with which we have integrated) will open soon giving our users extra reasons to be connected on the blockchain. However, wider opportunities lie in the decentralized finance (DeFi) market, which has a total value locked of $250bn. The huge rise in the popularity of DeFi has resulted in many of our clients itching to get involved within the sphere, asking for solutions such as accessing the liquidity available from DeFi pools to finance their fund’s strategies, and proposing ideas to structure real financial products and finance them through DeFi liquidity. This trend is only the beginning of what is to come, and VALK aims to be at the forefront of bridging traditional finance (TradFi) with DeFi, not least for our clients’ wishes, but to enable a transparent environment to ensure access to innovative financial products for all.
Our first product, Merlin, is a DeFi smart wallet. Merlin extracts all the transactions related to one wallet, retrieves the position of each digital asset deployed across DeFi protocols and calculates the positions (vs USD or other currency) plus yield generated. Other information from DeFi protocols such as assets held, yield earned (daily) and portfolio value will also be provided. Merlin’s calculation engine will spot the date on which the user deposited the crypto, the price of the Token at the time of deposit and the current price of the Token. This will show the portfolio balance as well as the gain/loss.
We are also building an aggregator that provides a non-custodial portfolio management system for investors, retail and institutional alike, to manage their Decentralised Finance (DeFi) portfolio all on one interface on a smart account. The interface acts as API for all protocols, connecting financial institutions interested in digital assets to all crypto markets. Investors should get all functionalities related to different protocols in one App (deposit, withdrawals, repayment etc.). By integrating deposits from DeFi liquidity providers (LPs), the platform can aggregate deposits with other DeFi protocols in order to gain a higher yield for investors to participate in the ecosystem. Using the Portfolio Management System, digital asset managers/funds are able to manage all positions in one interface, allowing an easy shift into DeFi for institutions, which are often put off by the lack of institutional-grade reporting and monitoring services.
The interface includes features common across conventional smart accounts, such as lend, withdraw, borrow and repay. From the interface, the user can manage their positions at the click of a button, without having to leave the site. The user can execute actions to supply/withdraw assets, which will in turn impact other facts shown on the interface. More complex features such as the leverage increase, rapid repay and an automated management system for collateralized debt positions will be possible. These actions, usually complex and expensive, can be done in the background so the user will only have to execute one transaction overall.
Bridging TradFi and DeFi
We are continuing to support the deal flows of our TradFi clients on VDeal by ensuring the tokenization and workflow processes are as efficient as possible. By doing so, we are bringing these assets, whether they are debt-based or equity-based, on-chain and recognizable due to their tokenized and standardized nature. This is particularly important as more and more ‘Real World Assets’ are being financed from DeFi, thanks to the work of Centrifuge and MakerDAO. Ultimately, we can bridge the servicing needs of our VDeal clients with the huge liquidity across DeFi protocols.
Simultaneously, Merlin and our DeFi aggregator will attract more and more volume and users to our interface, meaning that one day, this will be the source of the liquidity used to finance the assets on our VDeal platform. Until then, we will focus on connecting our clients with the best possible financing, either using our traditional VDeal platform, or with collateralized debt vehicles on-chain, an innovation we are fully behind.
At VALK, we have always aimed to be at the forefront of innovation in finance and technology. When we started in 2019, we aspired to revolutionize the placement and management of private corporate shares, and built our deal tokenization platform, secured by R3’s Corda blockchain technology. This has been hugely successful and we have seen our client base grow to 90 financial institutions, with over $4bn worth of deals supported. However, this was not all. When DeFi exploded in 2020/2021, we knew we had to build on this so that we could leverage our network to the enormous value locked up on-chain.
So we started building DeFi products, including Merlin, our smart wallet and our DeFi aggregator. However, there were many issues we had to grapple with to ensure we could maximize engagement of users, from gas fees to efficiency of transactions. We realised that no single blockchain can handle the load of multiple mainstream applications. Deploying applications on a single purpose Layer 1 blockchain would quickly lead to the above issues, and we knew our current and future products would each have different needs and requirements. For example, our VDeal platform requires a closed system, with security and compliance as the most significant requirements, whereas VALK DeFi needs to tap into the open and vast space of DeFi on public blockchains such as Avalanche.
We became quickly attracted to the Avalanche blockchain, as we saw the potential of a blockchain that can manage hundreds of thousands of daily active users and over 4500 tps, while maintaining decentralisation with thousands of nodes validating and securing the network. More importantly, the ability to build a custom blockchain and subnet that could cater to the various applications that VALK aims to run was particularly attractive. Having one subnet wherein we control the number and type of validators so that the content within is only visible to approved validators is necessary for some of the larger institutions conducting deals on-chain, to secure their privacy. However the necessity for a public blockchain is also clear; we would like to connect liquidity across protocols and maximise the potential of DeFi. The three benefits of a subnet are articulated below:
- It reduces and isolates congestion on an application
- It allows customization of each blockchain including the virtual machine, fee structures, economic incentives and others.
- It allows us to manage compliance on those subnets that require it. This can be related to the users or validators of the blockchain, and can focus on geographical location, KYC/AML checks and other financial/regulatory hurdles it may meet.
Avalanche as a blockchain fulfils these criteria and will allow us to prosper as much as possible. We can’t wait to begin the journey on Avalanche and watch the ecosystem grow!