With more than $ 13 billion in total value stranded, DeFi has established itself in the crypto space despite all criticism. It is now a fact that the concept she puts forward has better advantages than the lending system advocated by traditional banks. Despite this potential, it is slow to become accessible to the majority of companies and structures in search of financing. To make up for this delay and make it effective, Artem Tolkachev –Founder and CEO of Tokenomica– estimate that DeFi will need to connect to real world assets.
Real-world assets as collateral to borrow money from protocols
Mr. Tolkachev first mentioned the urgent problems facing DeFi at the present time, namely the over-sizing of the guarantees requested and the volatility of these. As a solution, the CEO of Tokenomica proposes the establishment of an infrastructure capable of bridging the gap between real world assets and the DeFi ecosystem. According to him, this would allow anyone touse these assets as collateral to borrow money from protocols. However, he believes that these assets will have to meet certain criteria in order to effectively resolve the aforementioned problems. The stability of the asset is obviously the first criterion identified by Mr. Tolkachev to remedy the volatility problem.
He will then have to generate fixed income periodically in order to provide real cash flow. The determination of its value must be done in a transparent manner. based on several proven and recognized sources, something that DeFi lacks. Such requirements therefore imply that the asset would be in the form of bonds or fixed income securities. “The use of bonds ensures asset stability even in times of high volatility in the crypto market, thereby eliminating the risk of liquidation. Basically, this will allow DeFi investors to benefit from both the income generated by the guarantees and the interest payments made by borrowers. Said the analyst.
Three major problems in setting up such a system
Aware that it will not be easy to set up such an infrastructure, Mr. Tolkachev himself spoke of the obstacles that will need to be overcome. The first of them and not the least is that DeFi loans require collateral in the form of digital assets. The second difficulty is much more structural.
” Borrowers are able to attract funds from DeFi protocols strictly in cryptocurrency, and the same is true for interest payments. As companies operate in the traditional system, loan funds and debt repayment must be set by decree »He explained. The last obstacle is nothing more than the absence of a legal framework defining the rules for borrowing a protocol.
Cryptoassets are highly volatile unregulated investment products. No EU investor protection. Your capital is at risk.
While it is good to recognize the existence of difficulties with the advent of this connection with the real world, the analyst has not failed to draw up a lucid observation on the state of DeFi. The instability this market is currently experiencing despite its potential, it clearly shows that it needs to open up to the traditional financial market.