TORONTO, March 25, 2021 (GLOBE NEWSWIRE) — DeFi Technologies Inc. (the “Company” or “DeFi Technologies”) (NEO:DEFI, GR:RMJR) is pleased to announce that it has entered into letter of intent with HIVE Blockchain Technologies Ltd (“HIVE”) (TSX.V:HIVE, OTCQX:HVBTF, FSE:HBF) for a share swap arrangement, by which HIVE will receive ten (10) million DeFi Technologies common shares, representing 6.5% of the existing outstanding common shares of the Company in exchange for four (4) million HIVE common shares, representing 1.1% of Hive’s issued and outstanding common shares. The transaction, which does not involve any cash payment by either side, is expected to close on or about April 16, 2021 and is conditional on the completion of satisfactory due diligence by both parties. In addition, HIVE and DeFi Technologies plan to create a partnership surrounding the decentralized finance (DeFi) ecosystem with specific applications around Ethereum and Miner Extractable Value (MEV). The new partnership, which follows three months of discussions, will provide the Company with a strategic stake in HIVE and a broader partnership surrounding the DeFi ecosystem with a specific focus on the Ethereum based MEV space and developments surrounding it.
MEV refers to the amount of profit miners can extract from reordering and censoring transactions on the blockchain. It has become an important issue over the past year as the DeFi space has grown from US$3B to US$71B in market capitalization. Of the $347.3M of Extracted MEV, 88% comes from DeFi activities (see graph below). As can be seen from data by Coin Metrics, over half of all ETH miner revenue currently comes from transaction fees. By partnering together to take on these activities, individuals get a more capital efficient market to play in, while distributing greater returns to miners for acting more altruistically.
The DeFi sector has appreciated dramatically since 2020 and has reached a tipping point with institutional investors and large enterprises showing increased interest in the decentralised finance sector. In Q3 2020, the U.S. Office of the Comptroller of the Currency (OCC) published guidance clarifying national banks can provide services to stablecoin issuers in the U.S. This and other interest from venture capital and financial institutions in the decentralized finance sector is a major step in widespread adoption of DeFi.
This new strategic partnership presents a significant opportunity to create more value per deployed mining infrastructure for HIVE by leveraging MEV applications. For DeFi Technologies, the partnership gives exposure to one of the largest miners of Ethereum, which is the backbone on which DeFi applications are built and thus serves as a critical component supporting the sector.
Wouter Witvoet, CEO of DeFi Technologies, said: “We are extremely excited to form a partnership with HIVE Blockchain Technologies. When HIVE was founded there was no way for public market investors to gain access to the growing cryptocurrency markets. HIVE was the first public mining company offering investors exposure to this nascent industry by offering the possibility to simply buy a stock in a brokerage account. Like HIVE, DeFi Technologies aims to accomplish the same by offering investors an easy way to gain exposure to the rapidly expanding decentralized finance sector. In 2020, HIVE was the most liquid stock on the Toronto Venture Exchange trading over 2 billion shares and the top preforming cryptocurrency stock globally by performance, increasing its share price by over 1500% percent. Approximately 96 percent of DeFi transactions occur on the Ethereum network, with HIVE being the only public company mining Ether at an industrial scale and the partnership gives DeFi Technologies the ability to leverage this infrastructure for future developments to scale in an unprecedented manner.”
Frank Holmes, Chairman and Chief Executive of Hive, said: “We are excited…