Blockchain Events
Ribbon Finance Will Lend $10 million to Folkvang and Wintermute
The lending platform of Ribbon was released to the public on Monday, and it enables establishments to borrow money without having to put up collateral first.
If you haven’t been living under a rock for the past few months, it’s likely that you are aware that unstable macroeconomic conditions have caused participants in the cryptocurrency market to become risk apprehensive. However, the early activity in the Ethereum-based structured product startup Ribbon Finance’s recently launched high-stakes loan product, Lend, reveals that this is not the case.
Depositors now have the ability, as of Monday after Ribbon’s Lend went live, to lend unsecured funds to institutional market makers of their choosing who have a high level of liquidity. The system has seen users deposit a total of 15 million USDC, which is a stablecoin whose value is tethered to the US dollar. Out of that total, more than ten million USDC was borrowed by Alameda-backed quant trading business Folkvang Trading and market maker Wintermute, which only recently suffered a loss of one hundred sixty million USDC as a result of a cyberattack.
“It is clear that there is still a desire for large yields in the decentralized financial sector. Users are willing to move out of the risk curve if it makes sense from a risk-reward perspective “Julian Koh, co-founder, and CEO of Ribbon stated in an interview with CoinDesk. It would appear that undercollateralized lending to respectable institutional trading firms is a good fit for this category.
At the time that this article was being prepared, the annualized percentage return on the loan of USDC to Folkvang and Wintermute was close to 7%. This is a huge increase compared to the 0.5% that is accessible on leading decentralized platforms such as Aave and Compound.
Uncollateralized Aave
Lend is referred to as “an uncollateralized Aave” by Ribbon, and it is touted as having “the benefits of both traditional finance and decentralized finance.”
A far lower interest rate can be paid for borrowing USDC from AAVE, but this comes at the expense of locking up another coin as collateral. An institution may do this. To put it another way, the borrower runs the risk of having the liquidity of the collateral locked and taken away from them, which is not the case with Ribbon’s Lend.
In the meanwhile, users of Lend have the opportunity to increase their yields by making unsecured loans to organizations that have already been examined by Credora to determine whether or not they are creditworthy. In addition, lenders have the ability to liquidate their positions at any moment, provided that there is sufficient liquidity in the pool. According to Ribbon, the vast majority of unsecured lending in Decentralized Finance (DeFi) is for the set period. This means that lenders are unable to withdraw deposits until the loan has reached its maturity date. The word “decentralized finance” (DeFi) is a concept that is used to represent financial activities that are carried out on a blockchain without the assistance of middlemen.
Folkvang’s CIO, Jeff Anderson, stated that borrowing through Ribbon results in greater capital efficiency. “With the introduction of Lend, Ribbon now offers a one-stop shop for the whole DeFi product suite, and we are delighted to be pioneers on the platform,” said the CEO of Ribbon.
The ribbon is credited with pioneering the concept of a decentralized options vault (DOV) in 2021, and they have just created a crypto options exchange known as Aevo. The DOVs have made trading options easier; now, investors need only deposit their assets in vaults, and the vaults will use those funds to purchase yield-generating option strategies.
Ribbon’s entrance into unsecured lending may be an indication that the market currently controlled by companies such as Maple Finance, Clearpool, and TrueFi is beginning to heat up. According to TrueFi, which was referenced in a recent story by Reuters, the entire value of the unsecured loan sector is currently $25 billion. In addition, 11 financial institutions responded positively to a poll conducted by Reuters, indicating that they are eager to continue providing unsecured loans despite the general collapse of the market.
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DAVOS 2023: At #WEF23, policymakers and business leaders were eager to distinguish between distributed ledgers and cryptocurrencies. Not crypto, but blockchain.
From climate solutions to humanitarian aid to moving on from FTX’s stunning collapse, the second day of the World Economic Forum’s 2023 annual conference saw discussions focused on the promise of the technology underlying cryptocurrencies, rather than the often speculative financial assets themselves.
The day opened with a panel of traditional banking professionals seeking to draw a line under the FTX issue, noting that, while the cryptocurrency industry is in crisis, other products founded on distributed ledger technology are not.
“It’s critical not to mix cryptocurrencies with CBDCs, stablecoins, and DLT… they’re all quite distinct,” PayPal President and CEO Dan Schulman stated. Despite the bitcoin crisis, “the underlying tech has operated well,” according to Schulman.
“The promise of a distributed ledger is that it may be faster and cheaper to settle transactions concurrently with no middlemen. That is really significant.”
Importantly, unlike past waves of “blockchain, not bitcoin,” which generally referred to permissioned blockchains, the talks on Tuesday were OK with public ledgers such as Ethereum and the Stellar network. Lynn Martin, President of the New York Stock Exchange, seems to adopt a similar stance, citing the potential benefits of blockchain in making share issuance more efficient or allowing financial exchanges to be settled quickly rather than days later.
“Some of the technologies have now been embraced and used to truly make processes considerably more efficient,” Martin added.
Former Indian central bank governor Raghuram Rajan later repeated that promise of broader blockchain uses.
However, TradFi’s commitment to the industry may eventually be tested: When questioned, Schulman, Martin, and State Street’s Ronald O’Hanley all claimed artificial intelligence, not blockchain, was the most exciting technology.
Carmen Hutt, treasurer for the United Nations High Commissioner for Refugees, detailed such an application – a recently launched blockchain payment solution for distributing humanitarian aid in Ukraine – just across the street from the forum’s main congress center, in a historic church transformed into a neon hub for hosting discussions about the future.
Hutt revealed during a panel discussion hosted by CoinDesk chief content officer Michael Casey that the pilot project, which was launched in December using the blockchain platform Stellar network, is significantly more sophisticated than one might assume.
Donations via the blockchain promise “transparency and visibility,” and the Commission has a platform ready to send relief immediately, according to Hutt. “What an incredible offer… We can deploy $500 million today if we acquire $500 million. So this isn’t going to take weeks or months,” Hutt explained. (Later that day, Ukraine’s deputy prime minister praised the contribution of virtual money to the military effort.)
Further along the legendary “promenade,” industry heavyweights ranging from Solana and Ripple to the Global Blockchain Business Council teamed together to develop a climate project that would use blockchain’s transparent record-keeping to assist in improving carbon emissions and credit tracking.
Although authorities have mostly focused on the potential of crypto contagion to financial stability, a string of bankruptcies last year that wiped out billions of dollars in retail investments, most notably Sam Bankman-FTX, Fried’s may have underlined the need for a shift in their focus.
For the lone banker on the conventional finance panel, the events of 2022 must shift regulators’ focus away from the risk of lenders bringing down the whole financial system and toward the risk of individual customers being duped by crypto frauds. “It’s not that regulators have disregarded [financial innovations], but if it’s not going to generate systemic danger, I’m not sure why we should focus on it.” For More Blockchain News, Click Here.
Blockchain has become increasingly prevalent in recent years, with applications spanning from new cryptocurrencies to their potential uses in various sectors, making it important for business leaders, industries, and regulators to have a deeper understanding of the technology and its potential applications.
While blockchain has yet to achieve widespread acceptance, it has the potential to drive significant digital transformative changes and generate new possibilities throughout the corporate landscape, from banking and finance to infrastructure and healthcare.
Blockchain is defined as “a distributed ledger that records transactions chronologically and publicly,” according to one source. Its database is shared across a network rather than being held in a single location, which enables a high level of information control and transaction transparency.
However, there has been so much hype surrounding blockchain on all sides of the debate, that it has become increasingly difficult to separate fact from fiction.
A study by Vorhaus Advisors, a Los Angeles-based digital media consulting firm, found that only 25% of people in the United States understand what blockchain is.
According to the same poll, 62% of people believe blockchain is the same as cryptocurrency, and 48% believe it is the same as bitcoin.
This lack of understanding of blockchain has caused confusion, skepticism, and fear about its use, which spreads across all sectors of industry and government, influencing not only business but also policy.
The fact is that blockchain technology has the potential to fundamentally alter how organizations and individuals trade products and information, and part of that revolution is already underway.
Blockchain has the potential to improve any business in which transactions require a permanent record and the confidence of many parties. Furthermore, it has the potential to dramatically simplify paper-intensive enterprises that require an accounting ledger.
Here are three real-world blockchain use cases to illustrate how adaptive, widespread, and disruptive it can be:
- Banking and Finance: Finance and banking have received the most attention regarding blockchain and for good reason. It’s an entirely transactional industry. For example, blockchain can convert paper-based functions such as letters of guarantee (documents provided by a bank that assure suppliers be paid for the goods or services they supply in the event that the payor is unable to pay) into a totally paperless, digital, and transparent process, helping to eradicate fraud and forgeries.
- Rethinking Healthcare: The pandemic’s unexpected demand for remote healthcare and other medical-related activities has moved the emphasis on delivering clinical treatment in a virtual or data-driven manner. As a result, the various medical data silos across healthcare providers can be integrated into a single shared blockchain network for secure and efficient data sharing.
- Supply Chain: Blockchain can also be used to improve supply chain management. A blockchain network can provide a single source of truth for the entire supply chain, from the origin of raw materials to the final delivery of goods to the customer. This can help to improve transparency, traceability, and efficiency in the supply chain.
In conclusion, blockchain is a powerful technology that has the potential to transform many industries, but it is important to separate the hype from reality. It is essential for business leaders, industries, and regulators to have a deeper understanding of the technology and its potential applications to fully harness its potential.
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According to the findings of a recent survey that was carried out by CasperLabs, it is anticipated that business adoption of blockchain technology will increase over the course of the following year in the United States, the United Kingdom, and China.
This is the case even though there are knowledge gaps.
Despite the fact that the cryptocurrency and blockchain industries have undergone significant change over the course of the past year, people and companies continue to display an interest in the area.
The results of a recent poll that was conducted by CasperLabs and Zogby Analytics revealed that businesses had a particularly upbeat outlook on the potential applications of blockchain technology.
The questionnaire was sent to a total of 603 “decision makers” employed by a variety of commercial firms in China, the United Kingdom, and the United States of America, in that order.
Almost all of the businesses that were asked about their usage of blockchain technology responded that they did so in some form, and almost all of those businesses (87%) also stated that they intend to make financial investments in blockchain technology during the next 12 months.
This phenomenon is especially widespread in China, where more than half of the respondents want to put money into blockchain technology by the year 2023.
According to Ralf Kubli, a member of the board of directors for the Casper Association, businesses are continuing to look to blockchain technology for solutions despite the recent turbulence:
“It is incredibly heartening to see businesses recognize that blockchain technology is not a threat but rather a solution,”
Companies who are now implementing the technology are reaping the benefits of two of its primary characteristics, namely security (42%) and copy protection (42%), both of which are proving to be highly useful for these organizations.
Those who work in IT-based operations are using blockchain technology for a variety of reasons, including but not limited to improving the efficiency of internal processes (for which 40% of users employ it), improving the efficiency of supply chain operations (34% of users employ it), and improving the efficiency of software development (30% of users employ it).
According to Kubli’s projections, the year 2023 will mark a pivotal turning point for the widespread use of blockchain technology, particularly in terms of offering practical answers to real-world challenges and producing long-term value.
In spite of this, a significant study shed light on the flaws that are commonly seen in CEOs of corporations. The vast majority of respondents (73%) feel confident in their comprehension of blockchain technology.
Despite this, 54% of those who replied continue to regard the words “blockchain” and “crypto” as being identical. In spite of the fact that the vast majority of respondents feel positive about their comprehension of blockchain technology, this is the result.
In a similar vein, it has been argued that the most significant obstacles to adoption are a lack of developer talent, a lack of tools, a lack of interoperability, and pessimism regarding the industry as a whole.
All of these factors contribute to a general sense of pessimism.
In spite of this, practically all of the people who took part in the survey stated that they would be more receptive to embracing blockchain technology if they had a better grasp of how their coworkers are utilizing it.
Education, in addition to accessibility, has been a challenge and a barrier for a significant amount of time for those people outside the space who seek to interact with the technology and engage with customers. This has been the case for many different causes throughout history.
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