Bitcoin Pioneer Bets On Decentralized Finance After Crash


One of the earliest advocates of Bitcoin is pursuing a new passion: Decentralized finance.


Erik Voorhees, who garnered widespread attention after his exchange ShapeShift was accused of helping criminals launder funds — findings ShapeShift disputes, citing research from CipherBlade — bought an Israeli startup that is focused on the so-called Defi movement. In Defi, software programs control everything from lending to interest-bearing savings accounts to buying cryptocurrencies — independent of the traditional financial system. Anyone with an internet connection can swap tokens, lend or borrow money or buy digital art — services that have exploded in recent months.


Already, more than 40,000 people used Defi applications monthly as of January, according to Binance Research. While the number of startups working on Defi nearly doubled last year, only about 20 projects enjoy sizable usage, according to Binance, which runs one of the world’s largest crypto exchanges.


When cryptocurrency prices collapsed earlier this year, the experimental Defi sector could have folded — but it didn’t. The market capitalization of companies involved just crossed $1 billion, according to DeFi Market Cap.


“That was a very good test of its durability,” Voorhees said in a phone interview. In crypto right now, “the Defi stuff, I think, is the most interesting, because of how quickly it’s moving, of how many tiny startups are emerging every day, and how each of them work together.”


Voorhees bought Portis, a two-year-old cryptocurrency wallet that’s integrated into more than 70 Defi applications, including those from ShapeShift. The wallet, to be renamed ShapeShift, makes it possible for someone to buy cryptocurrency from within any distributed application with a debit-like card.


The crypto pioneer declined to give the price of Tuesday’s acquisitions or details on Portis’s user base. Tom Teman, co-founder of Portis, used to be a senior Web development manager for BlackBerry, according to his LinkedIn profile.


Voorhees is rebuilding his crypto business from the ground up: When ShapeShift.io implemented know-your-customer requirements in 2018, it lost about 90% of its trading volume. Last year, he launched a sister site, ShapeShift.com, which aims to not only let people trade, but also to store digital assets in a way that doesn’t give centralized exchanges control over the funds. The site’s user base has been growing about 20% a month since its launch in July, Voorhees said.


As his business — and the cryptocurrency world — navigate this year’s ups and downs, Voorhees says he is still holding his digital coins instead of selling.


“The old timers are boring, they just hold their crypto forever,” he said. “We’ve been through a lot of these ups and downs.”

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