Nomura’s digital assets subsidiary, Laser Digital, today announces a strategic investment in Infinity, a decentralized finance (DeFi) protocol for institutional lending and borrowing. The investment accelerates Infinity’s development of critical infrastructure for “Institutional DeFi” or “Hybrid Finance.”

Founded by ex-Morgan Stanley Head of Structuring Kevin Lepsoe, Infinity is a pioneering interest rate protocol that forms the basis for benchmark rates and institutional-grade lending, borrowing, and risk management in DeFi. Infinity’s wholesale exchange, the first of several planned infrastructures, provides inter-exchange clearing, fixed and floating rate markets, as well as enterprise-grade risk management utilizing hybrid on-chain/off-chain infrastructures that deliver transaction efficiency, security, and scalability.

Infinity is led by a team of structurers, quantitative developers, and financial engineers who formerly worked at Morgan Stanley, Citigroup, PIMCO, and other global financial institutions.

Infinity recently raised seed funding from digital asset market makers and VCs, including Susquehanna International Group, GSR, Flow Traders, CSquared, Block0, OWC, CMS, and others. The investment by Nomura’s Laser Digital marks a concerted advance by traditional investment banks into the Institutional DeFi or “Hybrid Finance” space.

“Infinity is building critical infrastructure for DeFi, and its protocol enabling price discovery and management of risk within DeFi is transformative for institutions,” commented Olivier Dang, Head of Ventures at Laser Digital. “Infinity’s groundwork paves the way for institutional flows on-chain, new levels of rates and risk innovation, and we are keen to support their advances in the hybrid finance space.”

Laser Digital was recently unveiled by Nomura to spearhead its digital asset ambitions and is chaired by Steve Ashley, who previously led Nomura’s wholesale division, with Dr. Jez Mohideen as its CEO. Headquartered in Switzerland, Laser Digital’s investments are focused on DeFi, centralized finance (CeFi), web3, and blockchain infrastructure.

Hybrid finance — also known as Institutional DeFi or “HyFi” — represents an evolution of DeFi that combines elements of decentralized and centralized finance. It aims to enhance the efficiency, scalability, and security of on-chain transactions by using off-chain risk management and computing. This enables practitioners to access blockchain efficiencies while still retaining enterprise-grade risk management. The design of HyFi allows for the off-chain components to eventually move onto the blockchain as security and standards improve.

The development of Hybrid Finance comes in the wake of recent Bank of International Settlements (BIS) guidelines for crypto exposures published December 2022, with bank prescribed risk-weightings for tokenized assets to be treated on par 1:1 with their analog counterparts. The guidelines for global banks come into effect 1 January 2025.