History shows that the universe favors the bold, which is why advancements in technology wait for no one. It is either you join the movement or get left behind. Unsurprisingly, this worldview has begun to spur an increase in the demand for blockchain and crypto technologies. Much of this explosive interest stems from the innovative architecture that cryptocurrency brings to the financial landscape. Regarding BTC PEERS news platform "we have begun to enjoy real-world applications of blockchain, especially as it relates to autonomous and distributed financial services."
However, we cannot help but notice that it is imperative that DeFi – now an $18 billion market – conquers new frontiers to unlock new growth dynamics. For this innovative disruption to reach its potential, there is the need for a systemic synergy between DeFi and conventional financial infrastructures.
Cryptocurrency expert, Andrey Sergeenkov, said that "although the fundamentals of traditional finance are the complete opposite of decentralized finance, the fusing of these opposing principles will expose more people to the benefits of decentralization." There is no wisdom in secluding the DeFi landscape if the goal is to enable open finance.
Hence, more solutions are looking to implement interfaces that serve as portals between traditional infrastructures and the DeFi world. The main goal is to create bridges where traditional assets and DeFi protocols sync effectively. In this article, we will be exploring 5 projects where this model is being developed or already in use.
The team behind AMPLIFY is looking to capitalize on its connections in the traditional financial world and its vast experience in blockchain technology to democratize the supply chain finance market. AMPLIFY has identified the backdrops of the overly centralized and distorted supply chain finance system. And it is proposing an on-chain agreement and funding protocol. Therefore, it can provide advanced B2B and B2C products to establish a convergence of resources, data, and funds. Importantly, due to its blockchain integrations, AMPLIFY can enable transparent, manipulation-resistant, and scalable settlement and credit-awarding infrastructure that will have a direct impact on the global economy.
Interesting enough, AMPLIFY is not just relying on existing digital assets to achieve its lofty goals. Instead, it has introduced the stability of traditional assets and the dynamism of a tokenized governance model by issuing AMPT tokens. In other words, AMPT holders can influence the day-to-day running of the network and participate in a uniquely designed confluence of the vast capital market and the emerging decentralized finance market.
Most DeFi protocols are in Ethereum. It was the first smart contracting platform and continues to enjoy the first-mover advantage. However, by concentrating on Ethereum and ERC-20 tokens alone, other valuable cryptocurrencies like Bitcoin or BNB, for example, are left out, leaving billions worth of value under-explored.
For this, the Kava team built a high throughput and interoperable DeFi protocol that allows holders of other coins like BTC to lend and borrow using their assets as collateral. CertiK, Quant Stamp, and B-Harvest have audited its code. The Kava protocol acts as a decentralized bank, connecting users with products like interest-bearing accounts and stable coin loans.
Like other DeFi dApps on Ethereum, loans are over collateralized. This means, for every dollar minted, the borrower must deposit a higher amount to counter the volatility of the collateral's price. Loans are issued in USDX, Kava's stable coin backed by cryptocurrencies.
As of Jan 6, there was over $96 million worth of digital assets locked in the Kava protocol. From the $19 million of BTC locked, borrowers had taken out $6.6 million as loans. By lending BTC, users receive a 40 percent APY.
The Hard Protocol is a cross-chain money market on the Kava protocol that allows users to lend, borrow, and earn the HARD governance token. Rebranded from Harvest, the Hard protocol relies on Kava's rails for security, interoperability, and access to Chainlink's oracles required for price feeds.
The Supply Side of the Hard Protocol is currently active. This means that users can supply digital assets like USDX, KAVA, and Bitcoin. For supplying coins, the protocol rewards users with the HARD governance token. By Jan 6, $26.42 million of USDX had been supplied for a total value asset locked of over $37 million. For locking the HARD governance token, lenders receive a 90 percent APY.
In 2021, the second version of the Hard protocol will be released supporting the borrow side feature of added tokens, including LINK with the extended functionality of the HARD governance token. HARD tokens give voice to holders allowing the community to take charge in managing the protocol.
As highlighted in this article, there is an increased demand for DeFi and TradFi integrations because of the endless possibilities that it promises. Note that the projects listed here are just a handful of the plethora of solutions seeking to develop infrastructures, which are compatible with the two models of finance. Depending on their ability to deliver on these promises, we might begin to yield the fruits of a dual synchronous financial system sooner rather than later.