Porter Finance Shuts Down Due to Lack of Institutional DeFi Activity
Porter Finance explained that, because “institutional fixed income DeFi has not taken off yet,” it had to shut down.
On Wednesday, developers said that the Ethereum-based credit platform Porter Finance closed its bond issuance platform, citing a lack of demand from the decentralized finance (DeFi) ecosystem. The move comes amid declining crypto prices as broader equity markets reflect recession concerns.
The service allowed decentralized autonomous organizations (DAOs) to issue bonds as a way of raising funds in return for paying interest to users. These bonds offered an alternative credit option that was more flexible and long-lasting than loans, which were the other means of funding for the protocols.
In Wednesday’s announcement, Porter said that it was "not confident" of the large inflow of lending demand for fixed income DeFi products like those on its platform.
The note said that a lack of institutional adoption and the competitiveness of rates offered in traditional finance were the primary factors behind slow DeFi growth.
Jordan Meyer, founder of Porter, said the platform was also avoiding legal risks with the move. "We are also no longer willing to take on the legal risk associated with bond offerings," Meyer said.
At the time of going to press, Porter had not responded to requests for comment.
Meyer explained that the move does not affect the obligations that Ribbon DAO, which used Porter to issue its bonds, has to its lenders. "Ribbon DAO is still bound by its promise to pay back," he said.
Tracking websites report that Ribbon has a total of over $71 million in various cryptocurrencies, as of the time of writing. Porter was created in 2021 and raised $5 million from its seed round in April 2022.