According to a Bitcoinist report on March 3, as the cryptocurrency ecosystem is booming, the development of decentralized finance (DeFi) is also impressive. The latest products from Chainlink and DMM bridge the gap between Ethereum cryptocurrency assets and real-world assets.
(Image source: flickr )
Open up on-chain and off-chain assets
Chainlink recently announced a partnership with DeFi Money Market (DMM) to provide a higher-yielding currency market on the Ethereum network.On-chain tokens will be backed by real-world assets.
In an article published by Chainlink, cryptocurrency assets will grow exponentially in the coming years as fiat currencies are increasingly converted into digital form. The current total market capitalization of the crypto market capital is about 250 billion U.S. dollars, compared with the world's approximately 90 trillion U.S. dollars in physical currencies and account assets.
In fact, most of the real currencies have no interest income. If central banks continue to cut interest rates and accelerate the printing of banknotes, these countries may soon enter the era of negative interest rates.
The creation of a higher-yield decentralized currency market through blockchain technology is an excellent opportunity to take advantage of the downward trend in traditional currency market yields.
Defipulse tweeted that the total value locked on DeFi is now $ 967 million, and banks are better off being careful.
Banks had better be careful, as the dream of integrating real-world assets into #DeFi is becoming a reality.
Take @DMMDAO as an example, it acts as a bridge between cryptocurrencies and fiat currencies, using @chainlink Oracles can provide car loans funded by stablecoins
Welcome @DMMDAO to join the Chainlink ecosystem! DMM is a blockchain-based currency market, which is supported by real-world assets and trusted off-chain data from Chainlink Oracle. DMM currently has $ 10 million in tokenized car loans to launch its initial currency market. The DeFi market will allow borrowers of cryptocurrencies to use real assets mapped on the chain as collateral. The goal of DMM is to create the first blockchain-based currency market to fill the gap between real assets and digital assets. It will enable low-risk investors to lend cryptocurrencies in exchange for passive interest income. Borrowers can obtain short-term cryptocurrency capital loans by using their real-world assets as collateral.
At present, users can earn stablecoin interest by collateralizing cryptocurrencies, for example, Dai's deposit interest rate exceeds 7.5%.
Chainlink's decentralized network Oracle allows DMM to securely connect with off-chain reliable data sources, thereby providing on-chain information about tokenized assets.
Chanilink's article on Medium provides a more detailed description of how to achieve this goal, and also shows how this cooperation has spawned a new currency market with a $ 10 million auto loan token.
The assets that support DMM may include cars, real estate, and other real-world "hard" assets that can generate income on the chain. These assets are secured by senior guarantees, and DMM has the right to sell the secured assets as a priority when the borrower is unable to repay the loan, just like banks.
The above cooperation is another step in the rapid development of the DeFi market, which will become one of the most dynamic areas of the cryptocurrency ecosystem this year.