Understanding DEFI and Real World Assets

There continues to be exciting developments in the DeFi and crypto space, despite the "crypto is dead" headlines you might be used to seeing. The reality is, we're entering a new era of financial innovation. Just this week, Backed Finance leveraged Coinbase's Base blockchain to issue tokenized U.S. Treasuries. This integration represents a milestone in financial technology and signifies growing confidence in digital assets. Here's a distilled version of the news: 1️⃣ New Era of Investment: Coinbase's Base blockchain now has Real World Asset (RWA) tokens representing short-term U.S. Treasuries. This leap marks a significant bridge between traditional finance and the digital asset world, leading to enhanced market access and flexibility. 2️⃣ Simplified Processes: These digital U.S. treasuries streamline the otherwise complex and paperwork-heavy investment process. With the ease of digital transactions, individuals and institutions can directly acquire digital representations of U.S. government bonds, amplifying the ease of investment and portfolio diversification. 3️⃣ Security & Compliance First: Backed's RWA tokens aren't just innovative; they're compliant. Every token fully complies with regulations, offering a pathway into digital investments tied to real-world assets. This ensures user protection remains a top priority alongside technological advancement. https://lnkd.in/gW3nFbtD

Ever wondered how lending in DeFi actually works? It’s not like traditional finance: no credit checks, no paperwork, no waiting around for approvals. It’s just you, your digital asset, and the protocol. Here’s the core idea: your assets are your credit. Let’s say you deposit 100 BTC into a DeFi lending protocol. With an 80% loan-to-value ratio, you can instantly borrow $80 in USDC, ETH, or other supported assets. Now immagine same logic, but with a RWA tokenized asset as collateral. (i.e. your house or T-bills). It’s all powered by smart contracts. No banks. No middlemen. No bias. Why does this matter? → You get instant access to capital → You keep your upside if the asset grows → You can hedge risk or increase exposure, depending on your strategy It also goes beyond crypto, tokenized real-world assets can be used as collateral too. This is why I believe DeFi lending is one of the most powerful innovations in finance. Simple. Transparent. Permissionless. The way it should be. Thanks to AQube, Folks Finance, IE Cryptocurrency Club, and Bocconi Students Blockchain Association for collaborating on this educational series.

According to ResiClub, active housing inventory in America is still 15.7% below pre-pandemic levels. That’s on top of a housing crunch that dates back much longer than that. Even back in 2014, when my family and I were looking to buy a house in San Francisco, it felt nearly impossible. At one point, I lost hope, thinking we might never afford one. We were consistently facing situations where our offers were outbid with significantly higher cash offers, always exceeding the asking price. It was only with family support that we managed to make it happen. But what about those who don’t have that kind of help? This is where blockchain is making a difference. Through the tokenization of real-world assets, DeFi is creating pathways to capital and investment that were once unimaginable. Here’s how: 1. Real Estate Indexes Historically, high-value real estate investments—such as billion-dollar commercial centers—were accessible only to a select few. Blockchain-enabled tokenization democratizes this access by creating real estate indexes, allowing a broader range of investors to participate in large-scale projects with enhanced trust and transparency. 2. Tokenization of Real Assets Envision owning a fractional share of a corporate campus or receiving rental income from a prime property. Platforms like Hedera's Red Swan are turning this vision into reality by tokenizing properties and offering fractionalized units, thereby broadening investment opportunities. 3. Liquidity and Accessibility Traditional real estate investments often suffer from illiquidity. DeFi addresses this challenge by integrating crypto investors into real estate pools, enabling projects to raise capital more efficiently. Fractional ownership further democratizes investment in high-value projects, making them accessible to a wider audience. The bottom line: DeFi and blockchain are not just reshaping the real estate industry. They’re restoring hope. These technologies can create a path to ownership and investment that’s more equitable, transparent, and inclusive.