(Bloomberg) -- Alameda Research, the cryptocurrency trading juggernaut founded by Sam Bankman-Fried, is funding a portion of its $5 billion in daily trading activity with money provided by decentralized-finance lenders. 

The associated precursor of the cryptocurrency exchange FTX said it will borrow as much as $750 million from the DeFi lending platform TrueFi within a year. Alameda was one of the investors in TrueFi parent TrustToken’s $12.5 million fund-raising round last year. It also borrows from smaller rival Maple Finance. 

One of the biggest constraints for the crypto industry since its birth more than a decade ago has been access to the traditional banking system, in part because of the anonymous nature of many of the transactions. To fill that gap, companies such as TrueFi have sprung up, typically raising money by allowing cryptocurrency holders to earn a return in exchange for lending their tokens out to borrowers. 

“As DeFi has become a bigger part of the ecosystem, it’s become a bigger part for us,” Sam Trabucco, Alameda’s co-chief executive officer, said in an interview. “All the major DeFi platforms in general, we’ll use them.” 

DeFi apps let people and companies lend, borrow and trade with each other directly, without intermediaries like banks. Unlike many other such apps, TrueFi doesn’t require borrowers to put up full collateral, and it focuses on institutions. DeFi lending apps hold about $108 billion, according to industry data tracker DappRadar. 

Alameda conducts “double-digit percentage” of its trading through DeFi apps, Trabucco said. And DeFi borrowing is “not an insignificant” part of its balance sheet, said Trabucco, without disclosing specifics.

The trading firm, founded by Bankman-Fried in late 2017, accounts for between 1% and 2% of overall global crypto trading volume, Trabucco said. Alameda was named after the northern California county Bankman-Fried was living in while starting the firm in his Berkeley apartment with his own money and funds borrowed from family and friends. Back in 2019, Alameda’s trading volume was about five times lower.

Even before the TrueFi loan, Alameda has been an active DeFi borrower. It’s already repaid $209 million of stablecoins to TrueFi, where it was the first client, and it still has $139 million in loans outstanding. TrueFi’s other clients include trader and investor Jump Crypto.

“We’ve been happy with the rates we are getting,” Trabucco said. “We are trying to do the things that make us the most money. It turns out that using these platforms is one of the best things you could be doing.” 

Alameda will end up paying around 7.5% in interest on its stablecoin borrowings at TrueFi, according to the DeFi platform.

TrueFi has created a pool for lenders, whose identities have been checked and who are not based in the U.S., to lend money specifically to Alameda. Spooked by recent market volatility and falling prices, many coin holders want to “put capital into something that’s going to provide an attractive return but have much lower risk” like Alameda, Rafael Cosman, chief executive officer of TrustToken, said in an interview.

TrueFi was launched in November 2020, and recently passed $1.26 billion in lifetime loans, Cosman said.

While Alameda also borrows money from non-DeFi sources,  “the big banks, they are still coming around,” Trabucco said. 

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