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Irreplaceable tokens may become a bridge connecting the traditional financial system to the emerging world of financial technology in the near future.In a recent interview, Liquefy’s CEO Adrian Lai (an incubator for investment companies and decentralized financial platforms) told United Telegram China Synthetic assets, NFTs and digital securities are redefining how capital markets operate.
Lai particularly believes that as long as there is reliable data input, the value of synthetic assets can enable everyone in decentralized finance to use basically any asset. This emerging trend between traditional finance and DeFi is inevitable.
Lai also pointed out that as the integration between security tokens and digital currencies grows, we will see an increase in activities between traditional finance and cryptocurrencies. He added:
“We have seen the merger of security tokens, utility tokens and NFTs. Now, NFTs can also represent real estate, which was not considered a few years ago. The integration of traditional finance and cryptocurrency fields is increasing.”
Taking centralized trading as an example, it is said that some transactions have surpassed the traditional understanding of pure trading venues. Platforms such as BlockFi and Coinbase provide retail-centric services such as savings accounts and encrypted payment options that at least make these platforms operate like traditional financial institutions.
Mr. Lai explained that synthetic assets are intended to imitate other investment products. They can combine various derivative products such as futures, options or swaps to simulate the underlying asset. These underlying assets can include stocks, bonds, indices, commodities, currencies or interest rates.
Challenges for the future
Although the integration of traditional finance and the encryption industry is inevitable, Lai believes that the current encryption industry still faces challenges such as liquidity exposure and reliable data predictions: “There is simply not enough information in the encryption field. In many Under circumstances, when someone in cryptocurrency wants to trade less liquid assets, there is not enough pricing data and other supporting information on the blockchain to facilitate the transaction.
Lai also pointed out that despite a lot of hype around NFT, the current NFT market is just a digital collectible market and does not require much liquidity. Li believes that in the long run, this collectible market is likely to remain, but some changes must be made to help the broader NFT market develop further.
He believes that dividing NFTs into several parts for investment may become a new trend in the digital collectibles market:
“NFTs can also represent real assets. Creating a small part of NFTs from real assets is a good way to provide traditional financial risks to cryptocurrencies. In this case, liquidity is important because you want to trade a portion of real assets.”
Tokenized DeFi
According to Lai, tokenization was previously provided mainly through security tokens. However, he believes that this will change due to DeFi, because using DeFi to tokenize assets can make it easier for everyone to use tokenization:
“Although security tokens are backed by real-world assets and their ownership is legally recognized, the liquidity of security tokens may vary, and we have seen that in many cases, when security token owners want to When they want to sell the assets they hold, they may not be able to trade at the best price.”
Lai believes that compared with the traditional security token supply model, the maturation of DeFi and the tokenization of real-world assets through the DeFi protocol will have greater potential: “Tokenization of assets in a decentralized manner can be Asset owners bring greater liquidity. At the same time, it provides real asset risks for all users of DeFi.”
As Cointelegraph previously reported, 2021 will be a crucial year DeFi will change the way financial services are used. So, can tokenization also play a role?
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