Wealthfront Crypto offering: A preview to what’s coming for DeFi (Decentralized Finance)

James Chung
3 min readJul 30, 2021

Wealthfront, a top robo-advisor, is providing its clients exposure and access to Grayscale Bitcoin Trust (GBTC) and Grayscale Ethereum Trust (ETHE).

This will allow their 450,000+ clients to capture the additive benefits of unsystematic risk in their traditional portfolio’s. Concentrated systematic risk is real as we see falling revenues and unsustainable increase in global debt, which may be absorbed only by inflation, high taxes or even default. Exposure to these digital assets is a matter of allocating to risk factors and not asset classes. To read more on this click here!

Wealthfront is attempting to demonstrate their fiduciary role by allowing up to 10% exposure to these digital assets. With $25 billion in assets under management they compete with the likes of SoFi, Betterment, Vanguard, Ellevest and Stash according to nerdwallet.com. It will be a matter of time until all of them offer exposure to cryptocurrencies in some form if not with Grayscale. Robo-advisors are a logical next step forward for cryptocurrencies as digital wallets and platforms like Nexo, Voyager and Celsius continue to be profitable. Existing fintechs and crypto specific platforms will eventually meet somewhere in the middle and perhaps partner if they see any synergies. We saw this recently at the EthCC conference (largest annual European Ethereum event) in Paris, where Uniswap growth lead discussed possible partnerships with PayPal, E*Trade and Stripe. To watch the presentation click here!

“We’re trying to put Uniswap and the rest of DeFi right there in those applications so that we can bring the dream of open, 100% uptime liquidity to the whole world,” Schap said. “PayPal wants to talk to us, E*Trade wants to talk to us, Stripe wants to talk to us.”

– Ashleigh Schap, Uniswap Growth Lead

For Wealthfront, providing exposure to these assets is the first step before they start to possibly incorporate DeFi in their offerings to clients. Traditional consumer finance applications will have to integrate DeFi to stay alive and relevant to their user base. Digital wallets such as Celsius already offers clients the ability to earn and borrow on your cryptocurrencies; a product of DeFi. In comparison to Wealthfront’s 450,000+ users with $25 billion in assets (since 2008), Celsius has 883,000+ users with $15.6 billion in community assets (since 2017). Celsius is a good example of how one can straddle both realms of CeFi (Centralized Finance) and DeFi (Decentralized Finance). It allows them to act in their community’s best interest by deploying assets to institutions, retail, exchanges and DeFi and thus offering the highest rates and paying more interest on more tokens than anyone else.

What is CeFi?

Centralized Finance or “CeFi” is similar to your bank. CeFi platforms allow users to earn interest or get loans by lending or borrowing it through a centralized trusted entity or a corporation. These corporations are responsible for the success of their products and their clients’ well-being, so you have to trust people behind them with your funds. The biggest advantage of CeFi is that it eliminates the need to be a DeFi expert, know how to manage keys, who to trust, when to deploy and when to exit.

What is DeFi?

Decentralized finance, or “DeFi”, is the ecosystem of financial applications (dApps) enabling anyone with an Internet connection to access a variety of products and services spanning crypto exchanges, margin trading, financial derivatives, algorithmic trading, and lending markets.

Most of the DeFi applications are built on top of the Ethereum blockchain and use Ethereum’s smart contracts — programs that automatically execute transactions if certain conditions are met. It allows replacing intermediaries such as banks that manage lending in the middle.

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James Chung

Founder and Contributor @DigitalBankr. I write exclusive research, analysis and market news on all things blockchain, including crypto-assets.