DeFi
Uniswap Removes Stock Tokens – Trustnodes
Decentralized cryptocurrency exchange ZKSwap has announced that its upcoming V2 mainnet will go live on July 28 via the Layer 1 Ethereum mainnet. A layer 2 launch is planned to occur sometime thereafter on Binance Smart Chain, Huobi Eco Chain, and OKEx Chain.
This update will introduce a variety of new features for third-party projects looking to list their tokens for trade, such as the allowance of unlimited token listings and pairs. The update will also lower cross-layer withdrawal times from 40 minutes down to 20 minutes, and give users the ability to pay their withdrawal fees using an expanding list of tokens, such as Ether, Tether, and the platform’s own ERC20 token, ZKS.
Once deployed on all planned networks, the team noted that ZKSwap v2 will be ready for mass adoption, ensuring listed projects can move liquidity across blockchains as they see fit. As for scalability, transactions take place on layer 2 to minimize wait times and fees. As a result, the project says that users will enjoy gas-free transactions every day up to a predetermined limit. The exchange also intends to hold a campaign at launch to ensure a hassle-free migration for liquidity providers.
Related: The rise of DEX robots: AMMs push for an industrial revolution in trading
After launching in February 2020, ZKSwap locked in over $1.7 billion in just six months. Its users are rewarded in the platform’s ZKS token, which currently plays a role in network governance. ZKSwap also takes advantage of various consensus methods such as proof-of-stake, or PoS, proof-of-transfer, or PoT, and proof-of-ZK-snarks, or PoZK.
Exchanges, decentralized and otherwise, have continued struggling to regulate in recent days. Binance CEO Changpeng Zhao recently announced that he plans to step down from decentralization in an attempt to achieve regulation in even the toughest countries. Meanwhile, crypto-companies are dropping out of China left and right due to its recent crackdown.
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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.
Disclaimer. Cointelegraph does not endorse any content or product on this page. While we aim at providing you all important information that we could obtain, readers should do their own research before taking any actions related to the company and carry full responsibility for their decisions, nor this article can be considered as an investment advice.
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While serious institutional interest in crypto is perhaps becoming more of an established trend than an emerging narrative, the focus of big-money players is usually on Bitcoin (BTC). However, assets like Ether (ETH) and decentralized finance (DeFi) are beginning to pique the attention of major investors.
For Siam Commercial Bank (SCB), DeFi is a major focus point of its current digital asset drive, as Thailand’s oldest bank prepares itself for the expected financial technological disruption of decentralized finance. While other banks are still undecided or only making temporary forays into interacting with digital assets, SCB says it is keen on committing funds to explore the blockchain and DeFi space.
SCB’s DeFi focus is also coming at a time when regulators in Thailand are targeting the decentralized finance space for more stringent regulations. Indeed, regulatory attention is increasingly coming the way of the niche market space with national and intergovernmental agencies looking to craft legal policies for the DeFi market.
DeFi initially held the promise of decentralization; the disintermediation of the established gatekeepers of global finance. However, with banks and financial institutions investing in decentralized technology, the narrative appears to be shifting towards a hybrid form of DeFi known as regulated DeFi, which combines the extant norms and efficiency of traditional finance, instant settlements and cost reduction benefits associated with decentralized protocols.
DeFi ambitions
Siam Commercial Bank’s $110 million blockchain war chest started as a $50 million seed fund initiated back in February by SCB 10X, the bank’s venture arm. As reported by Cointelegraph at the time, the fund further strengthened the bank’s forward-thinking approach to the emerging developments in digital finance.
In a conversation with Cointelegraph, Mukaya ‘Tai’ Panich, chief venture and investment officer at SCB 10X, said that DeFi was a sort of revelation for the bank during its assessment of the emerging digital finance landscape.
“We were doing work on the blockchain industry and started looking into DeFi. And we were amazed by it,” Panich told Cointelegraph. According to the SCB 10X executive, the bank was quick to spot the paradigm shift of potential DeFi technology and the possible disintermediation of the traditional financial institutions.
“DeFi projects can be completely automated,” he said, noting that human involvement would be restricted to smart contract code upgrades. Panich also touched on the revolutionary nature of smart contracts and how lines of code can enable direct transactions between entities like lenders and borrowers without the need for a central counterparty.
Given the possibility of DeFi upending the legacy finance status quo, Panich says banks would do well to prepare for the imminent disruption:
“The reason we want to invest in DeFi and be part of the DeFi protocol’s ecosystem is because we want to understand and capitalize on DeFi, given its potential to meaningfully impact the financial industry.”
At $110 million, the blockchain and DeFi fund is almost half of the SCB 10X’s $220 million venture capital fund. Commenting on the size of the allocation to digital assets, Panich said that it was a reflection of the bank’s commitment to the DeFi space, adding:
“SCB 10X has invested and developed multiple collaborative relationships with the blockchain community in Asia and across the world including Ripple, BlockFi, Sygnum, Alpha Finance Lab, Anchorage, Anchor Protocol (part of Terra chain), Axelar and Ape Board, among others.”
Related: Thai bank’s venture arm invests in institutional crypto custodian Anchorage
Upending global finance
Back in April, John Whelan, head of Banco Santander’s blockchain lab in Madrid, put forward an argument for regulated DeFi. According to Whelan, private layer-two settlement networks for asset classes running on top of public blockchains will likely emerge in the future.
According to Whelan, blockchain adoption for reducing transaction settlement throughput is a major focus point for legacy finance stakeholders. Whelan’s comments highlighted the emerging narrative that rather than disintermediation, financial institutions will find means to adopt DeFi tech to their own backend processes.
Panich also echoed similar sentiments, telling Cointelegraph: “I want to point out that I really see a future where traditional financial companies will work together with DeFi companies. My view is that in the future, there will be an integration of traditional finance with DeFi.”
According to the SCB 10X chief investment officer, banks and financial institutions have the necessary “customer-facing” experience to better offer innovative fintech services to consumers. “In the future, I can see a world where DeFi can power the back-end of traditional finance companies,” Panich added.
For Rachid Ajaja, CEO and co-founder of decentralized capital market outfit AllianceBlock, the promised upending of legacy finance by DeFi is something that will happen in the long term. However, Ajaja said the short-term trend will consist of more financial institutions leveraging aspects of decentralized finance.
The AllianceBlock CEO drew parallels with the digital transformation era that saw the emergence of fintech companies providing services via APIs that interface with the banking system. “With the bridging of DeFi and financial institutions, we will see exactly the same thing, and bit by bit, legacy systems will change,” Ajaja told Cointelegraph, adding:
“Long term, I am absolutely confident that DeFi will upend the global financial system completely because everything that is done in traditional finance can be replicated in DeFi with lower cost, less need for a middleman, new opportunities and increased new revenue streams. It’s only a matter of time.”
Craig Russo, director of innovation at the nonfungible token vault and marketplace protocol PolyientX, also provided further insight as to the possible future path for DeFi adoption in global finance. Russo told Cointelegraph that financial institutions will most likely adopt open-access protocols via initiatives like Compound Treasury while also utilizing DeFi technology within their internal systems.
“A big goal of the DeFi movement is to revamp the current economic system to better align incentive structures, which may ultimately come at odds with the interests of some institutions while opening the door to a new wave of fintech innovation,” Russo added.
Related: Thailand to target DeFi in latest regulatory clampdown
Dealing with regulatory pressure
As the SCB continues with its exploration of blockchain investment opportunities, authorities in Thailand are shining the regulatory spotlight on DeFi. Back in June, Thailand’s Securities and Exchange Commission (SEC) announced plans to consider a licensing regime for the decentralized finance protocols, especially projects that issue tokens.
Commenting on how the bank will handle the increased scrutiny of the DeFi space, Panich stated, “SCB 10X’s aim is to absolutely work within the regulations laid out by the government and regulators such as the Thai SEC and the Bank of Thailand.”
“Blockchain and DeFi are very young, emerging and fast-changing industries. As a TradFi player active in DeFi, it is incumbent upon us to work closely with the government and regulators to help put forward the DeFi industry’s perspective, finding optimal ways to move the industry rapidly forward.”
The Thai SEC’s plan to consider DeFi regulations is indicative of the current attention being paid to DeFi by regulators across the globe. Also in June, the World Economic Forum released a policy toolkit for fair and efficient DeFi regulations.
The emphasis on fair and efficient regulations is likely based on fears that blockchain startups may be at a disadvantage from a compliance standpoint if more stringent measures are applied to DeFi. Regulated entities like banks and financial institutions may find it easier to negotiate these policy constraints.
Indeed, AllianceBlock’s Ajaja made this same point to Cointelegraph, stating, “DeFi primitives are definitely at a disadvantage in this regard against their counterparts in mainstream finance.” As such, Ajaja stated that compliance gateways for protocols like Know Your Customer and Anti-Money Laundering are necessary for greater compatibility with mainstream finance and the move towards interfacing with real-world assets for DeFi primitives.
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