Exponential Wants to Make It Easier to Invest in Defi

Exponential, best known as a crypto risk assessment platform, is launching a new product suite designed to make the world of decentralized finance (DeFi) less daunting for retail traders.

The new platform, which has been available to a small number of beta testers for the past year, aims to serve as a one-stop shop for traders to identify, learn about and invest in crypto opportunities.

According to Driss Benamour, Exponential’s CEO and co-founder, the company began two and a half years ago when his other co-founder, Exponential president Medhi Labbar, was managing a fund for friends and family and was struggling to move their money into decentralized finance investments.

“I saw how much pain he was encountering,” Benamour said in an interview with CoinDesk. “He was bridging. He had this crazy spreadsheet. He was managing 12 wallets. I was like, ‘This is insane.'”

Exponential, which raised $14 million in a 2022 funding round led by prominent crypto venture firm Paradigm, started as a platform that investors could consult to discover DeFi opportunities and assess their risk. The new platform differs from its predecessor in that it will allow users to invest directly from the app.

According to Benamour, Exponential’s new platform is “the safest and easiest way to invest in DeFi with institutional grade security.”

Exponential will continue to emphasize risk assessment, showcasing detailed risk information next to every investment opportunity listed on the platform. It is also designed for retail traders who might not have experience investing in blockchains, so it features a user interface and feature set geared towards a wide audience.

“In order to truly make it accessible, you have to hit it from all angles, all in one,” said Benamour. “It means one-click trading, easy funding with crypto or fiat. It means easy portfolio management. It means easy taxes, and so on and so forth. We built a comprehensive platform so that really anyone could invest in DeFi and access yield.”

“There is no way today, except Exponential, to send $100 from your bank account and enter a Uniswap pool in less than 24 hours,” said Benamour. “That’s the magic of what we do.”

Exponential says it is taking a regulation-forward approach and is committed to taking a different path from the ill-fated DeFi yield platforms of old.

Exponential is registered as a money service business with the U.S. Financial Crimes Enforcement Network (FinCEN) and requires certain personal information from users to operate.

Like other platforms, it temporarily holds user funds before it invests them on-chain, a step meant to streamline the investment process and remove network gas fees. (Exponential charges its own 20 basis points on every trade). According to Benamour, however, “everything is also trackable on-chain. You can see your wallet as a user on-chain, and you can see funds move and get receipts from smart contracts.”

Platforms like Exponential, which serve as middlemen between banks and blockchains, are often criticized for undermining the decentralization that’s supposed to be at the core of DeFi.

“We may move to a fully decentralized platform when we can,” said Labbar, but he added, “We prioritize access, and right now, the easiest way to unlock access and to unlock the promise of DeFi, which is about freedom, is to introduce this layer of centralization.”