The Need and Vision
In today’s financial system, only the largest businesses get direct access to liquid capital markets. Most depend on banks for their capital needs. The lack of an open and transparent marketplace denies these smaller businesses access to competitive interest rates mostly due to market inefficiencies and transaction costs.
A major headwind for Investors today is a low yield macro environment with an increasing probability of downside risk and permanent loss (default risk); Hence, finding investable assets that provide de-risked, capital protected, and attractive yields is a major challenge for Investors.
On the other side of debt markets, a wide variety of small and medium sized enterprises including FinTech’s (Originators) seek to bridge funding gaps at attractive rates to expand their business and gain a competitive edge. The main problem for Originators is that access to risk-priced funding is inefficient, slow, and offered at unattractive rates. This results in real-world businesses losing their competitive edge because of higher costs of capital that is often passed on to their customers (typically small and medium businesses).
A natural evolution of the crypto economy is its integration with the real world. A future that leverages the power of blockchains and liquidity in DeFi protocols to enable transactions in multi trillion dollar markets in the real world is the next phase for the growth of crypto. However, there are several macro and micro factors that are preventing these needs from being met:
1. Record low and negative interest rates have been driving Investors into riskier investments
2. Crypto Investors have become reliant on volatile, over-collateralized lending opportunities from Automated Market Makers (AMMs), Yield Farms and Algorithmic Trading Platforms
3. The crypto economy has expanded 100X from August 2020 to August 2021, resulting in billions of dollars locked up in the crypto world, however this is still a tiny fraction of the capital flows in the real world
4. Over-regulated environments and inefficient marketplaces are squeezing Investor yields and excluding them from otherwise viable markets
5. Originator access to funding is based on arbitrary pricing, resulting in inequity and funding gaps in the real economies
6. The existing real-world payment and settlement rails add additional overhead and costs, everytime funding is moved between international boundaries, this results in broken local markets and slow movement of funds
7. There is no market verifiable risk whitelisting for Originators, which results in arbitrary pricing and inefficient/outdated risk management practices
Become a institutional grade global DeFi platform and network, which provides Investors with open access to the assets prized basis their risk class by hedge funds and institutional investors, which will translate into lower cost and more flexible liquidity for real-world originators.
This is just the beginning. The Protocol we are building will enable use cases such as Deep Tier Finance fulfilling our vision to foster economic opportunity everywhere.