Traditional investors are getting more involved in Decentralized Finance to the point that even some banks and financial institutions have begun to offer services integrating DeFi protocols and tokens.
In Switzerland, the crypto-valley par excellence in Europe, Sygnum Bank, and Seba Bank already offer regulated banking services linked to DeFi tokens. Even with global financial apps like Revolut and Crypto.com, traditional investors have a gateway to this industry.
Poking around what types of DeFi tokens have been integrated with traditional financial services, lending protocols like the “historic” Aave and Compound cannot be missed.
Folks Finance aims to expand DeFi lending to the masses by developing peer-to-peer lending and borrowing based on Algorand’s Blockchain, fully entering its ecosystem, ideal for traditional investors.
Traditional investors: who they are and their expansion to DeFi
Traditional investors generally put their capital into assets such as bonds, cash, real estate, and equity shares, expecting capital appreciation, dividends, and interest earnings.
As the world of finance has expanded, other alternative assets have been included in the investment portfolio, responding to the diversification strategy.
Thus, from tangible assets such as precious metals and collectibles, we saw the integration of financial assets such as commodities, private equity, hedge funds, exchange funds, venture capital, and the newer fintech assets of cryptocurrencies, governance tokens, utility tokens, and Non-fungible Tokens (NFTs).
According to a Forbes report, today’s trend towards decentralized financial services is well underway, despite being an emerging market. With billions of dollars already earmarked for projects in this space, hardly a week (or even a day) goes by without a multi-million dollar fundraising transaction being completed.
And indeed, the result of the last three months (August 2021 — November 2021) is an increase in TVL or Total Value Locked in DeFi, by over $100 billion, surpassing $270 billion total.
With associated opportunities and risks, this rapid industry growth allows DeFi to offer a variety of possibilities. The traditional investor, in this regard, should consider the following points:
- What exactly is being offered.
- How this product or service is being managed.
- What market exists for this specific application.
Algorand: the ideal DeFi ecosystem for traditional investors
Algorand is the Blockchain that is quickly creating the ideal DeFi ecosystem for traditional investors. Early support is coming to the ecosystem to boost DeFi growth, such as the $400 million funds established by Borderless Capital, a financial institution focused on powering Algorand’s borderless economy. Also, this summer Arrington Capital, a digital asset management firm in blockchain-based capital markets, launched its $100 million Arrington Algo Growth Fund (AAGF) to support Algorand-based initiatives. Not only that, but Algorand has also been involved in a strategic partnership with NAX and SkyBridge Capital to provide digital applications and institutional investment opportunities to catalyze Algorand adoption primarily in North America and the Middle East.
Moreover, the Algorand Foundation launched the ALGO 150 million Viridis DeFi fund (the equivalent at that time of $300 million) in early September 2021, to fuel the significant initial growth of DeFi protocols in its ecosystem.
Algorand is the first L1 Blockchain to enable “fast DeFi” and a ground-up network for risk-averse TradFi applications. By the end of 2021, plans are in place to run 45,000 TPS without sacrificing decentralization, surpassing Mastercard’s current 5,000 TPS and Visa’s 1,700 TPS. Algorand’s infrastructure allows for the creation of new DeFi, TradFi, and combination applications, incorporating these two capital pools into each other.
Another aspect to consider is the unique expression Algorand gives to legacy security capital, compared to other DeFi Layer 1’s such as Ethereum. In practice, the protocol can deliver performance while boasting (1) of a forkless empire, (2) radical decentralization, and (3) zero downtime from the start. That plays a significant role in transitioning closed TradFi asset bases into a supercharged DeFi-native infrastructure.
All of this and more is what Algorand founder Silvio Micali has overseen during the development of the ecosystem.
Micali has been on the faculty at MIT, Department of Electrical and Computer Engineering, since 1983 and is the co-inventor of probabilistic cryptography, Zero-Knowledge Proofs, Verifiable Random Functions, and many of the protocols that form the basis of modern cryptography.
His respected reputation is evidenced by several awards, such as the Turing Prize (in computer science), the Gödel Prize (in theoretical computer science), and the RSA Prize (in cryptography). Micali is also a member of the National Academy of Sciences, the National Academy of Engineering, the American Academy of Arts and Sciences, and the Accademia dei Lincei.
Algorand-based Folks Finance to expand DeFi lending to the masses
With this backdrop of ever-increasing interest from traditional investors into the world of DeFi, Folks Finance is participating with its capital markets protocol created on the Algorand Virtual Machine, primarily inspired by the mission of opening up decentralized financial services to the masses.
Just as its name “Folks” indicates, Folks Finance aims to accommodate all sizes of wallets, opening the protocol to global accessibility. Thanks to the support of the number one DeFi L1 Blockchain, has become possible to support the inclusion of traditional investors at scale.
Specifically, intending to become the pillar of the lending industry, Folks Finance exists to expand lending and borrowing of ASA (Algorand Standard Asset) tokens, chosen based on economic and technical requirements, to the masses.