A study released on Monday shows that 43% of own Singaporean cryptocurrencies, while most of the crypto investors range between 25 to 44 years old, according to the Independent Reserve Cryptocurrency Index (IRCI).

This is the inaugural year for the Independent Reserve Cryptocurrency Index (ICRI) for Singapore regarding the adoption and other key factors of cryptocurrencies. Singapore, the city-state of ASEAN’s member country in Southeast Asia, scored 63 marks out of 100 in the ICRI index, higher than Australia with 47 points compared to the previous year. Singapore enjoys an open-minded and responsive regulatory environment, according to the report.

Per the report, serval highlights are shown as follows:

• 93% of Singaporeans are aware of at least one type of cryptocurrency. Bitcoin has the most brand recognition, with 90% of respondents saying they’re aware of it, followed by Ethereum (44%) and Litecoin (33%), respectively.
• 43% of Singaporeans own cryptocurrencies, which is remarkably high compared to regional and global average estimates—82% of respondents hodl Bitcoin.
• 74% of crypto holders report either making a profit or breaking even in crypto-related investments.
• Also, 76% of Singaporeans between 26 and 35 believe crypto will become widely accepted by businesses and the public.
• The primary driver of confidence in cryptocurrency in Singapore has increased clarity of local regulation and taxation issues.
• Almost 40% of respondents believe Bitcoin to be an investment asset, more than three times the number of those who consider it money.
• 21% of Singaporeans intended to buy crypto in 2020 but didn’t say their purchasing decisions were directly influenced by the economic fallout of the COVID-19 crisis.
• However, about 7% of respondents believed Bitcoin to be a scam.

Adrian Przelozny, the CEO of Independent Reserve, described Singapore as a “key hub in Asia due to its robust and well-regulated financial markets infrastructure and openness to new technologies.”

Singapore enjoys a crypto-friendly environment

Singapore enjoys a crypto-friendly environment worldwide. Earlier this month, a study ranked Singapore as the 3rd place after the United States and Cyprus in terms of the crypto-friendly index were more than 30,000 crypto searches per 100,000 people. Singaporean administration allows people to own and exchange crypto while at least ten crypto ATMs are operating.

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Lending has been around in some form for thousands of years — dating back to ancient civilizations where farmers would borrow seeds and use crops as repayment.

The arrival of fiat currencies transformed the way economies were run back then. Indeed, you could argue that we’re seeing such a seismic shift now as cryptocurrencies become a larger and more influential part of the world’s financial ecosystem.

When done right, crypto lending has the potential to level the playing field — giving consumers a type of flexibility that they may otherwise have been unaccustomed to. For several years now, the rates offered by banks have been tepid to say the least. In some countries, even the most generous savings accounts will only pay less than 1% interest — even if funds are locked up for several years.

Given how inflation has been rising sharply recently, in part because of the money printing performed in response to the coronavirus pandemic, signing up for one of these accounts means a saver’s money would actually command less spending power down the line.

Crypto lending offers three powerful advantages compared with the status quo. First, it is possible to find more competitive deals that ensure capital actually grows — with interest sometimes paid on a weekly or a monthly basis. Second, many platforms offer a much-needed degree of flexibility to lenders, meaning that they won’t be forced to lock up their money for long periods of time and can withdraw their funds at will. And third, it can act as a powerful incentive when markets are behaving rather erratically.

That’s before we’ve even discussed the fact that crypto as collateral can be far more practical from a lender’s point of view than real estate — an asset that is rather illiquid and can be rather time consuming to sell.

It isn’t just lenders who benefit

Of course, all of this sounds like a good deal for lenders — the people who have capital to spare. But it can also be beneficial for borrowers, too. In the current financial ecosystem, where a single blemish on an otherwise impeccable credit history can deny a responsible consumer access to the best interest rates, crypto platforms can offer an invaluable lifeline.

Banks often have an opaque list of requirements when it comes to finding the people they are willing to extend credit to. And, in a world where ever-increasing numbers of consumers are self-employed, otherwise creditworthy applicants can end up being excluded from the market simply because they don’t have a traditional nine-to-five job — irrespective of whether they actually earn more money in their current arrangement.

The crypto world can help to foster inclusivity here, but there are challenges. A number of lenders in this space are offshore and unregulated — something that can make them less appealing to everyday consumers. This also restricts the number of partnerships that crypto platforms can enter into with fintech firms.

A new approach?

One platform that is aiming to shake up the world of lending is Baanx, a crypto-as-a-service fintech intending to bridge the worlds of crypto and fiat. The company allows brands to offer interest-free forms of secured lending to their customers and communities, alongside high savings rates for those who stake their digital assets. This is all achieved via APIs that can be rapidly integrated into any DeFi, exchange, or wallet’s app or website.

This form of interest free and low cost secured lending is provided to those who stake BXX, the utility coin that’s associated with Baanx. Loans can subsequently be moved into crypto wallets or physical and virtual cards. For those who use Bitcoin and Ether as collateral, loan-to-value ratios of up to 50% are available, and approval can be achieved in one click.

Baanx is on the list of temporarily registered cryptoasset businesses with the FCA and also utilizes a lending license. The project’s whitepaper states that it will “lend against any digital asset including cryptos, stocks, bonds and the emerging NFT asset class.”

The volumes of money that can be offered through lending will depend on the volumes of tokens that are staked within its system.

Figures provided by Baanx suggest that the platform now has sold more than 600,000 white-label cards and accounts around the world — almost exclusively through branded corporate clients, including Tezos Crypto Life app, DeFi protocols, exchanges, and wallet providers. It is also planning to launch with a major wallet provider in the U.S. in the fourth quarter of 2021.

Do you want to know about the permissioned DeFi? Here we have covered the permissioned decentralized finance in detail!

Decentralized finance has come up as a prolific factor for driving the return of cryptocurrency alternatives back to popularity. It has been touted as the future of finance for all the right reasons. DeFi offers an open and global financial system tailored specifically for the digital age. Decentralized finance aims to provide an efficient alternative to the traditional, tightly controlled, and opaque financial systems prevailing worldwide.

It can enable better control and visibility over your finances alongside empowering you with insights required for better financial decisions. So, where does the topic of permissioned DeFi come in? Is it different from the decentralized finance or DeFi we know today? The following discussion gives you an introductory overview of permission-based DeFi.

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Understanding the Foundations

In order to understand permissioned decentralized finance, you don’t have to spend further energy than the basics of DeFi. A proper outline of the definition of decentralized finance alongside its work could help in understanding how ‘permissioned’ works in DeFi. Decentralized Finance basically points out a collective term allotted to financial products and services through blockchain. Most of the DeFi protocols or solutions in the market today are based on Ethereum.

DeFi ensures that markets are always open, and you could access financial services without the intervention of centralized authorities. As a result, the services in the financial sector, which were considerably slow and had higher risks of human error, could be automated. Now, it is possible to manage financial services through code available for anyone to inspect and evaluate. So, you can clearly notice how DeFi introduces improved transparency, security, and credibility of financial transactions.

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How DeFi Changed Everything?

If you want to learn about permissioned DeFi, then it is essential to find out the differences between DeFi and traditional finance. The differences can help you understand how DeFi overcomes the setbacks in traditional finance evident currently. At the same time, you can also get a fundamental impression of the reasons to introduce permission-based DeFi. Decentralized Finance was tailored for addressing some of the dominant problems in the financial services sector today. Here are some of the notable problems you could find in the financial services sector today.

• People could not access financial services such as setting up a bank account or borrowing money.
• People could not access employment opportunities due to the lack of access to financial services.
• Using financial services also puts personal data at risk.
• Government and centralized financial and regulatory institutions have the power of shutting down markets according to their will.
• Settlement of transactions can take multiple days due to the need for many internal human processes.
• Financial services are associated with premium fees because the financial intermediaries need their commission for facilitating financial services.
• Trading hours are generally restricted to business hours in specific time zones.

The road to permissioned decentralized finance started when DeFi imposed prolific influence on addressing all these setbacks. DeFi enabled people to hold ownership and control over their own money rather than vesting it in the authority of companies. Now, DeFi helps people in controlling the movement and expenditure of their financial assets. Most important of all, DeFi enabled the faster settlement of transactions, generally in a matter of few minutes. Furthermore, DeFi also ensures that markets are always open.

However, DeFi also presents some advantages which have underlying pitfalls. For example, DeFi is openly accessible for anyone. Therefore, malicious agents could also participate in DeFi ecosystems with the intention of compromising the system’s integrity. In addition, the transaction activity is pseudonymous, thereby creating difficulties in ascertaining the identity of parties responsible for certain discrepancies in the system. Such type of setbacks in the DeFi ecosystem gave birth to permissioned DeFi. In order to understand how permissioned DeFi came into existence, it is important to find out how DeFi works.

Must Read: 50+ Top DeFi Projects In 2021 And Beyond

Working of DeFi

Decentralized finance or DeFi does not depend on any bank for facilitating transactions and other financial services among parties. On the contrary, it leverages the power of technology. DeFi focuses on development of various open-source protocols alongside public blockchain platforms which offer a framework for operations of decentralized finance. So, you would find two critical components responsible for the working of a finance system. The two components include the infrastructure on which the finance system must operate and the currency with which the system would work.

In the case of a centralized system, you would find banks and financial intermediaries working as the infrastructure. On the other hand, fiat currency such as US Dollar or Euro works as currency. DeFi replaces these two components for enabling access to a wide assortment of financial services. You could find both these components in a permissioned DeFi example, albeit with slight differences. Let us reflect on the two components in the working of DeFi to set the ideal foundation to understand permission-based DeFi.

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The infrastructure in the case of a blockchain system largely points out to a blockchain platform. Most of the DeFi applications you find today operate on Ethereum for writing decentralized applications. It helps in creating smart contracts which cite the automated code, which can help in the management of financial services. Smart contracts help in setting a specific set of rules for dictating the way in which financial services would work.

Subsequently, the rules have to be deployed to Ethereum. It is important to note that smart contracts cannot be modified after deployment. You could develop decentralized apps on Ethereum for offering any financial services. Smart contracts could help you with the autonomous management of financial services offered through the application.

The next important requirement in DeFi points out the currency. A stable currency is important for the creation of a reliable and highly secure decentralized finance system. In this case, stablecoins are ideal picks to avoid concerns of volatility and incompatibility of other virtual currency alternatives. One of the notable examples of stablecoin used in DeFi applications is DAI. It is a decentralized stablecoin with a similar value as the US Dollar. With the direct backing of US Dollar reserves, DAI is a trustworthy currency for DeFi.

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Where Does the Problem Arise?

As you can see, decentralized finance can open up a lot of opportunities in the financial sector. However, open accessibility for anyone and anonymity of identity in transactions could lead to profound security concerns. Therefore, permissioned DeFi had to make an appearance for dealing with some of the notable setbacks in DeFi.

What could be possibly wrong with open access to financial services for everyone? This could not be a favorable option for financial transactions in the internal ecosystem of an organization. Permissioned blockchains could offer additional security for DeFi, which is generally one of the top priorities of institutional players in the DeFi ecosystem.

So, what does the ‘permissioned’ aspect change in DeFi? We can get a detailed answer to this question by reflecting on permissioned blockchains. As we know, the blockchain platform is an important component for working with DeFi. It enables the development of applications through which users could access DeFi services.

Permissioned blockchain would ensure the addition of an access control layer. The access control layer would only allow specifically identifiable participants for carrying out particular actions. As a result, you can witness profound differences between permissioned blockchains and public or private blockchains.

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How Does Permissioned Blockchain Work?

The understanding of permissioned decentralized finance basically points out the use of permissioned blockchain as the infrastructure. So, how does it work? It is possible to build and access a blockchain through multiple avenues. Permissioned blockchains would require special permissions for reading, accessing and writing information on the platforms. The inherent configuration of the permissioned blockchain helps in controlling the transactions of participants. In addition, permissioned blockchain also helps in defining the roles of each participant in accessing and contributing to the blockchain.

The use of permissioned blockchain in DeFi also ensures the maintenance of the identity of each participant in the DeFi ecosystem. In addition, permissioned blockchains are considerably different from private blockchains. Private blockchain networks could allow only the known nodes to participate in the network. On the other hand, permissioned blockchain could allow any individual to join the network after definition of their role and identity.

Developers engaged in development of a permissioned blockchain could ensure that certain records are available for every individual to read. For example, developers could opt for showing product names and quantities in a particular transaction to everyone. The permissioning and profile maintenance tasks are carried out through the access-control layer. So, it is clearly different from public or un-permissioned blockchain networks without any control layer.

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Permissioned Decentralized Finance Examples

It is important to think about the reasons for which permissioned DeFi has become the central topic of discussions in present times. Recently, one of the notable DeFi solutions on the market, Aave, has planned to introduce its permissioned variant. Aave is presently the biggest DeFi lending protocol with over $16 billion locked in cryptocurrency assets. The organization is all set to present the first permissioned DeFi example for institutional investors.

The new permissioned alternative of Aave, Aave Pro, would work with segregated liquidity pools of ‘white listed’ users. The permissioned pools of users would have only those users who have successfully qualified all the Know Your Customer (KYC) protocols. Aave Pro aims at resolving the foremost problem of setbacks for the participation of regulated institutions in decentralized finance.

Now, it is inevitable to wonder about the possible factors that can draw institutions towards Aave Pro. First of all, Aave Pro ensures that users could earn almost 2.1% on US Dollars, reaching up to 3.2% by taking Aave token rewards into account. Interestingly, there is no risk involved in this permissioned decentralized finance application.

The high returns are possible as crypto asset investors do not want to sell their assets. The use of smart contract-based protocol helps users in borrowing up to 85% of the value of their assets. Subsequently, they have to pay only 3.1% for the loan. Aave disclosed that it had been working on permissioned liquidity pools for quite some time now.

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Security Identity in Permissioned DeFi

The most notable requirement in DeFi protocols based on permissioned blockchain is the security of identity. People with properly defined roles and identities could access a permissioned DeFi solution. So, what do you find in the practical example of permissioned blockchain DeFi of Aave Pro? Aave has collaborated with digital custody and security agency Fireblocks for addressing the KYC verification procedures.

At present, Aave Pro would continue with one KYC fulfillment service provider in agreement with senior management of different participants. However, the scope for growth of permissioned decentralized finance presents numerous possibilities for the involvement of other custody providers in the future.

At present, the concerns of regulating the DeFi landscape create various confusing choices for organizations participating in DeFi. Regulators may not take any interest in DeFi and follow the use of segregated pools or other organizations for the analysis of blockchain. However, the gradually increasing popularity of DeFi will ultimately bring the question of KYC into the equation.

Furthermore, people are also worried about big institutions pressing their resistance against the introduction of a permissioned variant of DeFi. On the contrary, the arrival of big institutional names in the DeFi ecosystem would slowly encourage other institutional investors to join in.

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Final Words

While one of the prominent benefits of DeFi focuses on its permissionless nature, the arrival of permissioned DeFi creates questions. DeFi opens the financial system to everyone, albeit with certain profound risks. Hackers are able to launder funds by leveraging DeFi protocols as there is no central authority for freezing their finds. The use of oracles in DeFi protocols helps in accessing external data while creating a central point of failure.

Subsequently, security issues in smart contracts are also responsible for putting DeFi users at risk of losing money and data. The use of a permissioned approach in DeFi helps in resolving all these concerns with an additional security layer. Learn more about DeFi and how the permissioned blockchain can revise the infrastructure component of DeFi productively.

To know more about permissioned DeFi, enroll now in our Decentralized Finance Course!

*Disclaimer: The article should not be taken as, and is not intended to provide any investment advice. Claims made in this article do not constitute investment advice and should not be taken as such. Do your own research!