Monday, July 4

Guaranteed Damage: The Decentralized Finance (DeFi) Time Bomb By CoinTelegraph

© Reuters. Guaranteed Damage: The Decentralized Finance (DeFi) Time Bomb

As 2021 draws to a close, the main line in the DeFi landscape consists largely of synthetic asset platforms (SAP (NYSE :)). A SAP is any platform that allows users to coin synthetics, which are derivatives whose values ​​are linked to existing assets in real time. As long as oracles can provide a reliable price supply, synthetics can represent any asset in the world and assume its price, be it a stock, a commodity, or a crypto asset.

As such, SAPs are finally bridging the gap between emerging DeFi platforms and legacy finance, allowing investors to bet on any asset anywhere, and all from the cozy confines of their favorite blockchain ecosystem. Decentralized and operating at layer one of, SAPs would appear to be the next big growth catalyst for cryptocurrencies. However, unlike solid money and verifiable works of art, in the world of secured loans, decentralization and secure ownership are only half of the equation.

Secured debt In traditional finance, secured debt instruments are among the world’s leading financial assets, with a cumulative valuation of nearly $ 1 trillion. Most people know them as mortgages, a term whose etymology dates back to 13th-century France and literally translates to “promise of death.” Perhaps morbid or melodramatic for the average individual, but for the many millions who lost their retirement accounts, life savings, homes and livelihoods after the 2008 financial crisis, the terms “promise of death” and “harm with collateral “are not only appropriate but part of the course to convey the anguish and agony that await those who participate in secured loans without first understanding the risks and ramifications involved.

Read the full article on Cointelegraph

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