Decentralized finance is quickly maturing. While the total value locked in DeFi is over $45 billion, financial institutions and large corporations are starting to implement DeFi concepts to automate business processes. This is known as “enterprise DeFi.”
For instance, invoices and other financial products can be tokenized to ensure that transactions are valid and should be processed for payment across multiple parties. Coke One North America is one of the first large corporations to demonstrate this.
CONA is leveraging the Baseline Protocol — a project that coordinates confidential workflows between enterprises using messaging, zero-knowledge cryptography and blockchain — to tokenize invoices. CONA aims to “baseline” its entire supply chain by giving internal bottlers and external suppliers access to a private, distributed integration network.
Through use cases like CONA, such solutions are quickly gaining traction. There are also a number of vendors entering this infrastructure market including Provide, an enterprise middleware provider, and Big Four firm Ernst & Young. Most recently, ConsenSys — one of the leading blockchain software companies — announced plans to use Baseline Protocol as a solution for its enterprise clients, further demonstrating the importance of enterprise DeFi adoption.
How ConsenSys plans to drive enterprise DeFi
Specifically, ConsenSys Codefi — ConsenSys’ fintech suite that connects financial use cases to blockchain counterparts — will soon offer a baseline-compliant solution for its enterprise clients.
Didier Le Floch, institutional products and engineering lead at ConsenSys Codefi, told Cointelegraph that while the Baseline Protocol was developed by EY, ConsenSys and Microsoft, Codefi has been taking steps to ensure that its products will eventually be fully compatible with it:
“We want to enable the use of digital assets and the financing of those assets for payment use cases. These use cases will generate maximum business value, combining automation of business processes and payments using things like stablecoins, for example.”
In order to achieve this, Floch explained that the Codefi tech stack will be combined with the Baseline Protocol to deliver an effortless user experience for cases such as financing supply chains. Floch remarked that this is a first step in the right direction, as Codefi strongly believes that the enterprise sector will soon converge with the DeFi market: “There will be ebbs and flows, and it will be a journey with various steps, but we’ve already seen the promise of this convergence in the DeFi market.”
To his point, MakerDAO — the protocol behind the stablecoin Dai — announced support in June 2020 to use non-crypto-native assets, such as invoices and music streaming royalties, as collateral for its Dai stablecoin. Maker also voted to support a protocol from blockchain startup Centrifuge to bring real-world assets on its platform. Known as “Centrifuge Chain,” this is built on Parity’s blockchain development framework, Substrate.
Asset originators can use the Centrifuge Chain to mint nonfungible tokens of real-world assets, converting them to ERC-721 tokens. These assets can then be added to Tinlake, which is Centrifuge’s Ethereum-based DeFi protocol for decentralized asset financing.
A Centrifuge spokesperson told Cointelegraph that the company is currently working with MakerDAO to bring New Silver, an online real-estate lender, on to the Maker platform as an asset originator. As such, NewSilver would be the first asset originator using Tinlake to get to the MakerDAO executive vote, ultimately allowing asset originators to generate Dai as a credit facility.
DeFi protocol Aave also introduced a diversified money market to support real-world assets back in October 2020. According to the Aave blog post, this money market would make it easy for the Aave community to onboard real-world assets into the protocol, allowing investors to lend against assets, such as invoices, real estate and inventory finance. “Right now, it’s at a small scale, but there are DeFi lending protocols already taking steps to incorporate real-world assets into their protocols,” said Floch.
Breaking down barriers hampering adoption
Many enterprise DeFi concepts are still in early development, as a number of barriers exist. For instance, there are concerns regarding publicly available sources to determine the price of collateralized assets. Furthermore, many DeFi protocols venturing into the enterprise space only allow solutions for borrowing in crypto, which may be unappealing to mainstream organizations. Moreover, paying transaction fees in cryptocurrency may also be problematic for enterprises that typically deal in fiat payments.
Floch explained that Codefi’s use of Baseline Protocol is intended to address these concerns. For example, he noted that there will be an “Infura ITX” integration that will enable corporations to pay gas fees in dollars rather than Ether (ETH) when using the Baseline Protocol. Since the platform leverages the Ethereum network as its mainnet of choice, or as a common frame of reference for complex workflows, this integration will ensure a better user experience overall.
In addition, Floch mentioned that ConsenSys’ open-source zero-knowledge proof library, known as “gnark,” will be leveraged to ensure enterprise data remains private, yet verifiable.
While notable, Codefi’s implementation of the Baseline Protocol isn’t the only solution intended to solve the challenges related to enterprise DeFi adoption.
For example, EY has been heavily involved in the blockchain space, specifically in terms of enterprise DeFi development. Paul Brody, global blockchain lead at EY, told Cointelegraph that the firm has been working on DeFi enabling solutions since 2016, with the goal of making the inputs and outputs of enterprise business processes tokenized and then transactable:
“This means purchase orders, invoices, receivables, inventory — everything in traditional business-to-business processes should be ready to integrate into a DeFi ecosystem.”
Of course, Brody is aware of the challenges regarding this vision, noting that the first element to be tackled is achieving an acceptable level of privacy for enterprise users. Once this is accomplished, Brody explained that necessary standards need to be established where bodies, such as the Enterprise Ethereum Association, can be key partners in the pursuit of these goals.
Brody further mentioned that as an industry auditor, EY will not be offering financial services involving DeFi. Rather, the firm is devoted to ensuring that enterprise clients will be able to plug their business operations into existing DeFi solutions. For example, Brody explained that EY’s Network Procurement solution is designed to manage purchase orders and fulfillment, which would allow enterprises to exchange tokens for purchase orders, contracts, invoices and inventory transfers. “As soon as we see standards we can leverage, we hope that our enterprise users will be able to take advantage of these markets,” said Brody.
Institutions show interest in DeFi?
In addition to a growing number of enterprise DeFi solutions in development, there is now interest in DeFi from large organizations and financial institutions. This was recently demonstrated by the leading digital currency asset manager, Grayscale. On Feb. 26, 2021, the firm announced consideration to offer investors access to DeFi assets, including Aave, Compound’s COMP, MakerDAO’s MKR, Reserve Rights (RSR), SushiSwap’s SUSHI, Synthetix Network Token (SNX), Uniswap’s UNI and Yearn.finance’s YFI.
Although this is separate from enterprises using DeFi protocols to find real-world assets, Floch noted that this demonstrates more institutional players are ready to invest in prominent DeFi protocols:
“For institutional customers of Grayscale to start investing in those tokens is definitely a sign that they’re getting more comfortable with Defi, while understanding the value of those protocols (asset management, collateralized lending and trading automated in smart contracts).”
Coinbase CEO Brian Armstrong Urges for Fair Crypto Regulations
Ahead of the long-anticipated public listing for his company, Coinbase’s CEO Brian Armstrong asserted that US regulators are wrong in believing cryptocurrencies are primarily used for illicit transactions. He added that the industry wants to be treated on the same playing field as traditional finance when it comes down to legislative frameworks.
Armstrong on Crypto Misconceptions
The belief that digital assets are mainly used for illegal transactions has been going on for years, perhaps since bitcoin’s usage in some dark web marketplaces starting almost a decade ago. Regulators have used it as a good bashing point, and US-based watchdogs have been at the forefront of those attacks.
US Treasury Secretary, Janet Yellen, has repeatedly outlined the alleged massive usage of bitcoin and other cryptocurrencies for terrorist financing, Ponzi schemes, buying illegal goods, and everything in between. Naturally, the Treasury’s FinCEN department proposed quite restrictive legislation, which, however, has been indefinitely postponed.
Brian Armstrong, the CEO of the largest US-based crypto exchange preparing for its direct listing today, touched upon these concerns during a CNBC interview. However, he asserted that cash and even the highly-regulated banking sector are more frequently utilized in illegal transactions than crypto.
He referred to a report published today by the recently launched Crypto Council for Innovation indicating that “less than 1%” of all digital asset transactions have illicit roots. Simultaneously, PwC estimations showed that the percentage is more than 4x higher with the traditional economy, and more specifically cash.
“The data we have just indicates that crypto is really not uniquely crime written. In fact, the data suggests it’s better than cash in that regard.”
Treat us Equally
Armstrong further outlined the significance of adequate regulation for his company, especially now that it will become public, but also for the entire industry. He suggested that the US should treat the crypto space as other financial sectors.
“We want to be treated on the level playing field with traditional financial services at the very least and not have any kind of punishment for being in the crypto space.”
He also joined Kraken’s CEO, Jesse Powell, saying that the world’s largest country by nominal GDP risks falling further behind other nations, such as China, in terms of crypto and blockchain adoption.
“China has really embraced cryptocurrency and blockchain in a big way – starting from about six years ago. They are substantially far ahead.” – Armstrong added.
MakiSwap Raises $1.4M to Build AMM Platform on Huobi Eco Chain
[Press Release – St, John’s Antigua, Barbuda, 14th April, 2021]
MakiSwap, the number one decentralized exchange on Huobi Eco Chain (Heco), has raised $1.4 million in seed and private funding to build the most robust and feature-rich automated market maker exchange and yield farming platform on Huobi Eco Chain.
The oversubscribed round was led by Inclusion Capital, which incubated and supported MakiSwap in its development efforts. Other participants include Kenetic Capital, LD Capital, NGC Ventures, Polygon Network, DAO Maker, Momentum 6, AU21 Capital, Xend Finance and others. Jawad Ashraf, Founder of Terra Virtua, also joined the round as an individual investor.
MakiSwap is the leading AMM on Huobi Eco Chain, a high-performance blockchain supporting the Ethereum Virtual Machine. Heco was launched by the Huobi Global exchange and was met with formidable community support in China and the Asia-Pacific region. Heco projects are now shifting their focus to the global market, looking to bring in DeFi users from other regions and other blockchains.
MakiSwap was developed by Unilayer, a cross-chain DEX aggregator and DeFi ecosystem. The exchange offers unique features for an AMM designed with the professional trader in mind, including limit orders, advanced charting tools, analytics, and more. MakiSwap also features lucrative yield farming opportunities designed to incentivize users to make the jump into the new protocol and blockchain.
“We’re extremely excited to launch MakiSwap on Huobi Eco Chain and to the public, we do see a big potential for HECO to capture a lot of market share compared to other blockchains in the near future,” said Geo, Founder of Unilayer and MakiSwap.
“Makiswap is leading a new wave of Defi by empowering Huobi’s ECO chain community with key tools and infrastructure. We are excited to support Makiswap in helping to transform global finance through Defi.” Jehan Chu, Founder and Managing Partner, Kenetic
MakiSwap is powered by the MAKI governance token, which will be airdropped to holders of Unilayer’s LAYER token on Ethereum and Binance Smart Chain.
MakiSwap is the leading AMM exchange on Huobi Eco Chain, developed and launched by Unilayer, a cross-chain liquidity aggregator and unified interface for decentralized exchanges. MakiSwap’s governance token is MAKI, distributed fairly to all holders of Unilayer’s LAYER token. MakiSwap includes an advanced set of features like limit orders and advance charting to offer the best experience for professional DeFi traders.
The Message Coinbase Embedded in Bitcoin’s Blockchain on Listing Day
Paying homage to Satoshi Nakamoto and his message embedded in the Bitcoin Genesis Block in 2009, Coinbase has done the same today. On the day they’re set to become a publicly traded company, the exchange asked a large Bitcoin mining pool to embed a note in the Bitcoin blockchain in regards to the latest stimulus bill.
- When launching the Genesis Block of the first-ever cryptocurrency in January 2009, the anonymous creator(s) embedded the following message referring to the financial crisis at the time:
“The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.”
- More than twelve years later, Coinbase has followed the example set by Bitcoin’s creator. The exchange announced they had asked the mining pool F2pool to code the following text:
“TNYTimes 10/Mar/2021 House Gives Final Approval to Biden’s $1.9T Pandemic Relief Bill.”
- The commonalities between the two messages spread more than being embedded on the Bitcoin blockchain. Both have referred to the economic struggles in 2009 and 2021 led by the aforementioned banking crisis and the COVID-19-induced crisis.
- More specifically, both messages have touched upon the governments’ somewhat controversial measures in trying to fight the consequences of the fallouts. Coinbase’s note cites this article published by the New York Times, which outlined the latest stimulus package aimed to alleviate some of the financial pain from the pandemic.
- The largest US-based crypto exchange has chosen today to pay homage to Nakamoto because of the significance of this day. As previously reported, Coinbase is set to become a publicly traded company on August 14th, 2021, through a direct listing.
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