The blockchain subsidiary of a steel pipe manufacturing giant, ZK International Group, has launched a decentralized finance (DeFi) protocol.
In some ways it sounds like a reverse version of New York-based beverage company Long Island Iced Tea’s December 2017 decision to rename itself Long Blockchain Corp when it began considering entering the blockchain business—a move that saw its stock jump 200%. Wenzhou, China-based xSigma, on the other hand, is sure is putting a lot of emphasis on the backing of its NASDAQ-listed pipe-making parent firm as proof of legitimacy.
The Nov. 25 announcement noted prominently that ZK International is NASDAQ listed and “a designer, engineer, manufacturer, and supplier of patented high-performance stainless steel and carbon steel pipe products primarily used for water and gas supplies.”
It also said the move makes it “one of the first publicly traded enterprises to invest and enter the growing DeFi arena.”
That may not last long. In October, a Boston Consulting Group/Crypto.com study of 411 insurance, banking, and trading firms found that 86% are at least considering implementing financial services built on a decentralized framework.
A pivot from supply chains
To be fair, it’s not very far-fetched to see a manufacturing company get into finance. And when xSigma actually began as an R&D lab back in 2018, its original goal was on-target for the company: solving “real-world infrastructure challenges.”
Specifically exploring “new opportunities in smart contracts, supply chain management and other blockchain-based solutions.”
Since then, xSigma has “pivoted to decentralized finance, focusing on decentralized exchanges, stablecoins, and lending protocols,” the release explained. “The ultimate objective is to build a range of financial tools and products for the flourishing decentralized finance industry.”
The DeFi lending protocol is just “one of many decentralized finance projects xSigma plans to launch over the next 12 months,” xSigma said, adding that it is “launching at an opportune time in the blockchain arena… [as the] cryptocurrency market keeps growing and has added billions of dollars in market cap over the past 12 months.”
Of course it might help to keep the press release’s numbers current. It asked:
“What is DeFi? DeFi is the hottest trend in the blockchain industry, with more than $9 billion locked into the ecosystem as of the end of September.”
That’s currently $14.28 billion, according to DeFi Pulse.
The xSigma blockchain platform will launch with a dedicated decentralized stablecoin exchange featuring the liquidity farming that DeFi users fell in love with. The company notes that “many believe DeFi to be the new paradigm in global finance,” which is an idea shared by a fair number of industry experts.
For instance, Jay Hao, the CEO of leading crypto derivatives exchange OKEx, said in an exclusive email interview with Modern Consensus that DeFi will become a viable alternative to traditional finance. He explained that “DeFi really has limitless potential depending on how well its participants overcome its vulnerabilities and aches and pains as it grows.”
XSigma—on the other hand—does not think that industry insiders need time to iron out the kinks and instead claims that the companies involved in DeFi so far were not up to the task. As the announcement puts it:
“Despite its rapid growth, DeFi has generally been the domain of niche technology startups backed by unproven teams. On the other hand, xSigma, being a subsidiary of a NASDAQ listed public company gives xSigma the reputation and the best in class than many other companies in this space.”
The new protocol aims to be a financial tool “that provides a new level of transparency and legitimacy” to the DeFi space thanks to the backing of a major steel pipe producer. Details concerning the new platform will be released in the following weeks.