Liquidity provider and ETF market maker Flow Traders has gone live as an operator on Cap, a protected private credit marketplace built atop the EigenLayer mainnet.
The launch provides a “blueprint for how institutional finance comes on-chain,” Sreeram Kannan, Founder and CEO of Eigen Labs, said in a statement shared with Decrypt.
As an autonomous verifiable service (AVS) on the EigenLayer network, Cap enables Flow Traders to access EigenLayer’s slashing, redistribution, and unique stake features, bringing institutional capital to the protocol.
This illustrates that major firms can interact with decentralized protocols without compromising on accountability and risk management standards, Kannan explained.
While traditional credit markets typically rely on contracts and collateral arrangements, Cap uses EigenLayer’s slashing and redistribution features to create “self-enforcing financial guarantees” that can be automatically and transparently executed through code.
EigenLayer’s slashing mechanism means operators can be penalized if they fail to honor loan terms, collateral requirements, or repayment schedules. These penalties can then be repurposed rather than burned through redistribution, enabling a form of “protocol-level insurance” for institutional DeFi.
The infrastructure provides “customizable, automated financial tools that are fully transparent, but as safe and well-managed as traditional finance, meaning institutions get both trust and protection,” Kannan said.
He added that EigenCloud, the verifiable cloud platform powered by the EigenLayer protocol, is seeing increasing institutional DeFi adoption thanks to its ability to blend Ethereum’s security with a higher degree of programmability than the Ethereum Virtual Machine.
With on-chain data providing greater levels of transparency than in the TradFi space, Cap’s use by Flow Traders “validates that crypto infrastructure has matured beyond speculation into production-grade institutional finance.”
“Traditional finance is coming on-chain through verifiable rails, backed by cryptoeconomic guarantees,” Kannan said. “Cap is how they’re onboarding, and EigenLayer is the only infrastructure that can support this powerful use case.”
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