"Something interesting is happening in what is normally a dull corner of corporate finance. According to David Pakman, a managing partner at the venture firm CoinFund, finance executives are looking to park their companies' excess cash in DeFi vaults rather than money market funds or other familiar short-term investments. If this comes to pass, it would pull billions of dollars of new assets into crypto."
"This process typically involves calling up a bank during business hours and arranging a money market transaction or something similar. Now, though, there is a compelling alternative in DeFi, which typically offers higher yields, and-unlike conventional financial instruments-the opportunity to invest for very short periods of time with little fuss. Pakman says his firm is advising traditional companies, including a large consumer tech business, about how to connect their cash to DeFi vaults, typically by means of stablecoins."
Finance executives at large corporations increasingly explore DeFi vaults as alternatives to money market funds for parking excess cash, attracted by higher yields and quick, low-friction investments. DeFi vaults are protocols that use decentralized smart contracts to generate yield and act as automated asset managers. Corporate balance sheets often hold tens of billions in cash and short-term investments, and treasury teams actively seek incremental returns. Venture firms are advising traditional companies on connecting cash to DeFi vaults, typically using stablecoins. Recent regulation bars stablecoin issuers from paying interest, but that prohibition does not extend to DeFi platforms, creating a practical workaround.
Read at Fortune Crypto
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