Spool Finance Launches V2 Middleware for Institutional Entry into DeFi

According to Blockworks, Spool Finance has launched version 2 of its decentralized finance (DeFi) middleware product, aiming to become a gateway for institutions to enter the DeFi space. Spool v2 was developed with regulatory compliance in mind, following feedback from traditional finance institutions. The project's lead contributor stated that two major institutions could join through Spool by the end of next year, but did not disclose their names. To ensure regulatory compliance, Spool sought advice from Swiss law firm Bär & Karrer. Launched in March 2022, the Spool protocol offers a 'set it and forget it' solution for DeFi investment, creating automated yield strategies from DeFi protocols based on an investor's risk appetite. Spool is organized as a decentralized autonomous organization (DAO) that hires employees with specific mandates to develop the business side of the protocol. It has no formal legal organization. Initially, Spool faced challenges in attracting institutional investors, according to Simon Schaber, Spool's chief business development officer. However, after the crash of Celsius and other centralized yield-generating products in crypto, Spool saw increased institutional interest in Q3 of 2022. The protocol is now working on deals with fintech firms, small and regional banks, and is in serious talks with one of the ten largest asset managers in the world and one of the largest banks, though Schaber did not disclose their names. In version 2, vaults can now be 'gated,' meaning addresses can only interact if they adhere to know-your-customer (KYC) or other criteria, and 'multi-asset,' where investors can combine assets in a vault. Schaber mentioned that on-chain and off-chain assets could be combined through institutional partnerships, such as combining liquid staking tokens with dividend-focused real estate in a mutual fund. Tokenization of real-world assets is expected to be a major driving narrative in crypto in the coming years.