How DeFi Solutions Are Redefining The Financial Market – Thought Leaders

Author: Gene Deyev, co-founder and CEO of Stobox

The financial market, as we knew it before the advent of cryptocurrencies, was formed over the past 200 years. Financial institutions are recognized not only as banks, which are centralized organizations, but also as organizations that store, facilitate exchange, and maintain records of assets represented in the form of securities. This is why we know financial actors such as brokers, exchanges, underwriters, custodians and others. All of these financial market participants are heavily regulated, which means that their activities require special licenses and the state controls their processes and activities.

Financial assets include shares of companies, both private and public, bonds, fund shares and other financial instruments. Besides the fact that each country not only has a number of its own regulatory features, all technical infrastructure systems are also built on the principles of centralized management. In other words, users trust professional market players to manage their assets. For example, an investor buys or sells stocks through a broker, traders hold their balances in foreign exchange accounts for trading, or a bank customer trusts financial institutions to hold money. money in his accounts. Either way, the asset owners trust the third-party organization. And that’s a huge problem in the modern world that DeFi solutions aim to solve.

What’s wrong with the traditional financial market?

There are thousands of examples where even regulated financial institutions have deceived their customers, gone bankrupt, been blocked or completely lost all the assets they kept on their balance sheets. Many companies get rich surreptitiously by holding assets other than their own, wading through their balance sheets and playing complex financial games that asset owners in most cases don’t directly understand. Problems also arise in more stable companies, such as Lehman Brothers, not to mention small businesses in financially underdeveloped regions.

The problem is obvious: people cannot freely dispose of their property and depend on a number of often non-transparent organizations. Many centralized organizations operate the old fashioned way, although they have long since lost their credibility. Is there a chance to change the current situation?

Decentralized systems are the solution

The development and implementation of decentralized systems allow users to own their assets independently without the need for custodians or other centralized institutions.

First, let’s understand that decentralized networks are various blockchains that store data in distributed ledgers and do not need a central operator. Take the example of the Bitcoin blockchain. No authority could shut down the system or hack the data stored in it. To date, not a single hacker has been able to break into this network to steal other people’s assets. Blockchain is a database with the highest trust in the absence of a single system administrator.

The rapid development of the crypto industry over the past ten years has demonstrated a clear interest in decentralized technologies, and today cryptocurrencies are in circulation by 300 million users. Yet they are also regulated in most countries along with financial assets.

In the United States alone, 21 legal acts have been passed to regulate operations with crypto assets and their derivatives in the last three years. The concept of decentralized finance has entered everyday usage, including all financial transactions with crypto assets. Based on new technologies, decentralized exchanges, deposit and lending systems, complex programs of composite income by providing liquidity to other protocols, and much more have been created. Today, the DeFi market is estimated at $239 billion (defining market size as TVL in DeFi protocols) and growing.

But let me remind you that most transactions in DeFi happen with regular crypto assets that have no real value in the offline economy. Fundamental technology adoption will occur when tangible assets, such as real estate or corporate securities denominated in security tokens, are freely stored and traded on blockchains. This can happen through the modification of notorious outdated systems, centralized custodians and trading platforms. We are talking about the liberalization of capital and the possibility for all people with a blockchain wallet to participate in the global capital market, remaining directly the holders of their assets and not transferring their ownership to third parties.

Tokenization and decentralized solutions are the next step for businesses

An overwhelming majority of companies in the world are not public and therefore not traded on stock exchanges. Instead, they remain private and are rarely traded anywhere, making them far less liquid than public company stocks or even cash. Suppose you have a stake in such a business that you want to sell as soon as possible. In this case, you will not achieve this goal very quickly: even after finding an investor, it takes a few months to draft the documents. Fortunately, such a status quo is finally changing thanks to tokenization technology and decentralized solutions.

Any company can be tokenized and represented in the form of liquid tokens, which opens up a new world of opportunities for traditional private companies.

First of all, liquid companies attract more investor attention. The ability to sell the security tokens at any time on a decentralized platform that does not depend on brokers and intermediaries is a huge advantage. Stobox DS Swap is one such platform that our team works on.

Secondly, attracting money in such a business is much easier because the geography of the investor is global and not limited to the inner circle of the local owner or broker. Fully compliant online fundraising is an absolute benefit of tokenization.

Thirdly, DeFi mechanisms open up possibilities for creating new business models that would feature utility or NFT tokens. For example, a real estate project in Tulum, Mexico uses NFT and its own cryptocurrency to work with its community of investors and customers.

The last thing to mention is that the token asset entry threshold for investors is as low as $100 or even lower. Provided that 2 billion people in the world are unbanked and inflation rates continue to rise, preserving personal funds in a real estate-backed security token will be a reliable way to save for millions of people around the world. Imagine the world where several million commercial buildings are not owned by financial groups but are represented as millions of security tokens kept on androids or the wallets of Indian fishermen, bringing a stable annual income of 10% to 12%, as well as the possibility of selling an asset. at any time.


Today, tokenization is one of the most important vectors of development, and many countries are already including it in their development plans. For example, an analytical group from the company Stobox participated in working groups on the development of laws regarding tokenization with the Ministry of Digital Transformation of Ukraine.

In conclusion, it should be noted that despite the relative newness of tokenization, there are already a large number of learning material and many success stories as the market begins to take shape, developing its own unique leaders and approaches.

Comments are closed.