DeFi has been rapidly gaining traction, in large part due to the fact that the total value of the sector is more than $ 11 billion. While it makes sense that DeFi – an area characterized by terms like “yield farming” and “meme token” – has drawn the most attention in the cryptocurrency sector, the concept is also catching on in the corporate world.
Stefan Schmidt, CTO at Unibright – a corporate-level blockchain technology development company – told Cointelegraph that DeFi concepts can be applied in the corporate sector, where financial assets can be represented by programmable tokens: “In general, the definition of DeFi outside the corporate sector is still unclear. However, “according to him, DeFi is” anything that has to do with finance and that can be used as a token“.
Will 2021 be the year of DeFi?
Although the DeFi company is still in development, Schmidt mentioned that this will become more prominent very soon. These concepts will be implemented in the company’s IT technology stacks in 2021.
In the meantime, the first step in creating the foundation for DeFi for Business is to facilitate agreements between organizations for data sharing. In particular, these agreements show that all invoices and other financial transactions are valid and must be processed for payment. “”If you don’t have a trust agreement between all parties stating that the invoices are valid and need to be paid, you won’t be able to advance in the DeFi area“Said Schmidt.
In order to enable a possible use case, the blockchain development company Provide has formed a joint venture with Unibright. As of October 20th, Unibright will be operated entirely under the direction of Provide as both companies aim to unify the technology companies required to synchronize data securely.
The two companies have been working closely together for a year to support companies in implementing the basic protocol. An open source initiative by OASIS that usually uses the Ethereum backbone as a kind of middleware to serve data exchange organizations as a single source of truth. Coke One North America was the first publicly announced use case that demonstrated how the baseline protocol enables the bottling giant to generate token invoices across its supply chain.
Kyle Thomas, Managing Director of Provide, told Cointelegraph that the Baseline Protocol is indeed the hub that will facilitate the era of corporate data sharing to enable DeFi for businesses. “”The ability to seamlessly coordinate business processes such as purchasing and supply chain movements between trading partners is fundamentally changing global business“, he showed.
Integrate DeFi concepts at the company level
Thomas also noted that a joint venture between Unibright and Provide is attempting to operate an end-to-end baseline line as a service offering. This includes consulting firms interested in incorporating the basic protocol into their existing corporate resource planning systems. “”Once this implementation is understood, business ecosystems cannot be set up centrally, with each participant running their own supported IT technology stack.“, He said.
By adopting the Unibright framework, Provide can expand its UBT (Unibright Token) model for the upcoming launch of Provide Payments. According to Schmidt, Provide Payments will use the UBT tokens to provide liquidity for its managed transaction service. This service initially supports the payment of gas fees for arbitrary transactions broadcast on a public blockchain network such as Ethereum. Customers are billed based on the transaction volume.
Provide Payments will seek to enable traditional acquisition by public blockchain service companies without requiring customers to buy or hold the cryptocurrency. “”All of Unibright’s DeFi offerings are tailored to meet business needs“said Marten Jung, CEO of Unibright.” This combined offer paves the way for blockchain-based corporate data exchange. “
Tokenized standards will follow shortly
In order for a baseline-as-a-service offer to become a reality, token standards for orders or invoices still have to be developed. Paul Brody, global blockchain innovation leader at Ernst Young, told Cointelegraph that there will be an evolution over time where business users will follow the consumer path, adding: “You start out by coordinating business agreements, but then you add payments. As the basic protocol privacy tools become more widespread, we will likely see companies adopt DeFi.“.
Brody also mentioned that the first instances of DeFi being used in businesses are being represented by companies selling financial assets as receivables to third parties in bidding models. However, he noted that companies’ risk aversion means takeover later.
In addition, Jung from Unibright communicated this from the customer’s point of view: Many of the challenges raised relate to the ease of use of a technology stack running on the baseline protocol and the cost of ownership. However, Jung mentioned that transaction costs should decrease in the next few years This is difficult to predict when the blockchain is used as middleware to serve as the sole source of truth. Data protection regulations and authorized data are also challenges that must be overcome in order for companies to prepare for the adoption of DeFi technologies.
Interestingly, both Thomas and Schmidt assume that while Ethereum 2.0 has been predicted to boost DeFi in businesses, it will not have a material impact on the progress of the basic protocol. According to Schmidt:
“We are not limited by the limitations of Ethereum as the baseline protocol is blockchain independent. However, if a company wants to baseline a process over the Ethereum network, ETH 2.0 can help a little when the performance of Das Network is being expanded to reduce the need for a Layer 2 solution. “