Banking has a long and well-documented history. From the humble beginnings of custodial services for precious metals to today’s quantitative easing, there have been several leaps the system has had to accommodate. The latest paradigm shift in banking is to move away from a central body into decentralized finance (DeFi). The DeFi space is quickly adapting to complement or even replace several legacy banking’s primary functions. With OpenDefi, that gap is continuing to close at a breakneck pace.
What is OpenDefi?
OpenDefi is a comprehensive foundation for decentralized or peer-to-peer financial services. The team is learning from the mistakes and successes of other DeFi projects to deliver what may be the most inclusive suite of services. Ultimately it will serve as a bridge between traditional financial institutions and the new wave of investors and customers on the blockchain.
Whereas “traditional” DeFi operates only in blockchain and cryptocurrency, OpenDeFi moves to tokenize real-world assets. These tokens will then be traded electronically, across borders, with minimal fees and/or lag. Additionally, the team will offer staking and yield farming of these tokens.
Explain That Again
Tokenizing assets on the blockchain has been a goal ever since the first smart contract became functional. For example, gold is difficult to use. It is heavy, cannot easily be divided into small amounts, and is under a disturbing quantity of counterfeit attacks. Tokenizing gold bars would allow them to be traded and transferred as quickly as Bitcoin or other cryptocurrencies. The gold tokens can then be lent out, borrowed, or fill any role in the DeFi world.
Of course, the actual gold bars need to be kept in a secure vault, pass audits, and comply with international regulations. OpenDefi has already accomplished these goals, using physical gold as a proof of concept of their “OroPocket.”
What is OroPocket?
Built as the back-end infrastructure for OpenDefi, OroPocket is the wallet for tokenized assets. It will allow OroPocket users to:
- Instantly spend assets using an asset-backed debit card.
- Instantly transfer assets to any user globally
- Get instant loans
- Earn yield on all assets held in the wallet
Even token offered in OroPocket will be 100% insured and backed by physical assets, complete with audits carried out by registered third parties.
Creating a smart contract for physical gold and transferring it is a significant achievement. While traditional bankers and financial managers would likely herald this as a fantastic achievement, the cryptocurrency ecosystem is constantly innovating. The tokenized assets can then be staked to earn additional yield in ORO tokens. The lending and borrowing of cryptos are familiar to anyone who has interacted with Celsius, Balancer, or Uniswap.
The use cases for this functionality are legion. An art piece owner could tokenize it, lend the tokens out for interest, while still enjoying the original painting at home. Owners of precious metals could earn additional interest as their investment sits comfortably in their safe. Any physical asset or commodity could eventually have a digital counterpart, with its smart contract, which the owner could use at their discretion.
As an additional benefit, the tokenizing of assets opens up a world of loan possibilities. After verifying and tokenizing an underlying asset, like a house, the owner receives 100% of the tokens. These tokens can then be used for a low-interest loan, the same way a securitized loan works today.
This mechanism eliminates credit checks, references, and additional time and labor since a smart contract determine it.
Loans that default are paid back by auto-liquidating the held assets. The accrued interest from loans is used to pay for transaction fees and buy back the native utility tokens.
OpenDefi is chain agnostic, meaning that it can be integrated into most blockchains that run smart contracts. Bridging multiple blockchains will allow OpenDeFi to tap into existing liquidity pools and other “walled gardens.” Gaining access to these additional resources may eventually become the “killer app” of OpenDefi, as this is an issue plaguing nearly every DeFi project in the space.
The network is built on Ethereum for now, but utilizing both Tezos and MATIC for layer-2 solutions to increase speed and reduce transaction fees. Integration of these additional blockchains will be a welcome addition, considering that Ethereum is still experiencing high fees and network congestion.
OroPocket tokens will be ERC-20 compliant with an initial supply of 100,000,000 (One hundred million tokens). In addition to voting and governance, ORO will increase staking rewards and incentivize user interaction on the platform.
Wrap It Up
There is quite literally too much information for a simple primer article. The vision for OpenDefi encompasses trillions of dollars worth of assets, precious metals, and currencies. It is early enough to be enthusiastic but also premature to begin celebrating. These systems are layered on top of ever-evolving protocols, which are themselves being tweaked and refined. Having that said, the potential is substantial for not only consumer finance but institutions and enterprises.
Whitepaper – https://openfinance.oropocket.com/
Website – https://opendefi.finance/
Telegram – https://t.me/oropocket
Twitter – https://twitter.com/oropocket
*Disclaimer – OpenDefi is our Media Partner, and this content is made possible through their support. The above article does not represent financial, investment or trading advice and we do not recommend the purchase of any cryptocurrency or product without consulting a financial aid. The Daily Chain strongly encourages you to do your own research before making any investment decisions.