Cointelegraph spoke to Anchorage co-founder and president, Diogo Monica, to get his take on how the rise of decentralized finance (DeFi) is impacting the crypto custodian sector.

Monica stated that the increasing complexity of DeFi "is get-go to expose the inadequacies of cold storage custody and transmission human operations."

Anchorage'southward president emphasized the additional risks incurred through the array of on-concatenation actions necessitated by many DeFi protocols, stating, "Nosotros see in our back up for MKR governance, executive voting, and polling that clients desire and often need to participate in on-chain activities."

"As new and emerging protocols increasingly require this kind of active use of private keys, some custodians are having to put more trust in untested smart contracts, which can put customer assets at risk."

Institutions demand DeFi exposure

Monica said that Anchorage had noted institutional demand for DeFi exposure, stating, "Our institutional clients want to invest in a range of digital assets, including new DeFi projects and stablecoins."

"Anchorage'south mission is to increase institutional participation in the crypto space, and DeFi is where a lot of the most heady innovations are happening right at present," he said.

Efficacy of distributed custody organisation bolstered by COVID-xix

The Anchorage co-founder stated that the firm's distributed processes take proved particularly useful in the context of the coronavirus pandemic.

"Anchorage does not rely on transmission human operations or crave access to physical vaults or condom deposit boxes, unlike custodians that use cold storage," he stated, calculation:

"This point of differentiation is especially critical during the electric current pandemic: our solution works as information technology should even though our workforce is completely distributed, whereas other solutions depend on people physically getting themselves to whatever secure location is storing private key materials."

Anchorage supports forthcoming tokens

Anchorage recently announced support for Compound'south governance token (COMP), which comprises the fifth yet-to-exist-released crypto nugget supported by Anchorage, including TrustToken and Celo.

"Anchorage is always looking to support new cryptocurrencies in need by our clients," Monica stated.