DeFi will be the backbone of ALL finance
A common misconception is that DeFi is only useful when there is “collateral,” and it’s not beneficial for people seeking “loans.”
This is not the case. Protocols like Aave can actually serve as the backbone for all credit extensions in the real world, anywhere globally.
The concept of collateral is present in all credit transactions. In DeFi, we are primarily accustomed to crypto collaterals or tokenized assets. In traditional finance (TradFi), collateral ranges from mortgage-backed credit to credit extensions based on credit scores, where consumers' future cash flows are used as collateral.
The key to using Aave for every loan issued globally is tokenization.
This means real-world credit would be tokenized and then used as collateral to unlock more liquidity, funding similar loans in the real world.
Of course, all loans should be credit-rated, and not all tokenized credit can be used in Aave’s Blue Chip main market (though some will be). However, there will be other markets on Aave where these types of credit will be a good fit.
Eventually, Aave could become the backbone for all credit extensions, empowering finance and credit extension in the most democratic and neutral way.
Similarly, Maker could be used for global savings, providing access to savings for every single person on the planet.
Uniswap could be used to exchange all forms of value, including tokenized credit.
This is how DeFi will “eat” finance and, ultimately, the world.
A common misconception is that DeFi is only useful when there is “collateral,” and it’s not beneficial for people seeking “loans.”
This is not the case. Protocols like Aave can actually serve as the backbone for all credit extensions in the real world, anywhere globally.
The concept of collateral is present in all credit transactions. In DeFi, we are primarily accustomed to crypto collaterals or tokenized assets. In traditional finance (TradFi), collateral ranges from mortgage-backed credit to credit extensions based on credit scores, where consumers' future cash flows are used as collateral.
The key to using Aave for every loan issued globally is tokenization.
This means real-world credit would be tokenized and then used as collateral to unlock more liquidity, funding similar loans in the real world.
Of course, all loans should be credit-rated, and not all tokenized credit can be used in Aave’s Blue Chip main market (though some will be). However, there will be other markets on Aave where these types of credit will be a good fit.
Eventually, Aave could become the backbone for all credit extensions, empowering finance and credit extension in the most democratic and neutral way.
Similarly, Maker could be used for global savings, providing access to savings for every single person on the planet.
Uniswap could be used to exchange all forms of value, including tokenized credit.
This is how DeFi will “eat” finance and, ultimately, the world.
• • •
Missing some Tweet in this thread? You can try to
force a refresh
